Job work is not manpower supply when payment tracks work done and workers remain under contractor control.

Activities performed under work-order arrangements for loading, unloading, breaking, cutting, sorting, casting, processing and packing of brass scrap and brass products at the principal manufacturers' premises were held not to amount to Manpower Recruitment or Supply Agency Service. The consideration was tied to the quantum of work done, while the workers remained employed, controlled, paid and maintained by the contractor, showing execution of specific job work or contract manufacturing rather than supply of manpower. The reverse-charge reference in Notification No. 13/2012-ST did not change the character of the activity. The service tax demand was therefore unsustainable.

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Issues: Whether the activities undertaken by the appellants under the agreements with the principal manufacturers were liable to service tax as Manpower Recruitment or Supply Agency Service.

Analysis: The appellants undertook loading, unloading, breaking, cutting, sorting, casting, processing and packing of brass scrap and brass products at the premises of the principal manufacturers on work-order basis. The consideration was linked to the quantum of work performed and not to the supply of manpower. The workers remained employees of the appellants and were controlled, paid and maintained by them. Following earlier decisions on identical facts, the Tribunal found that the agreements were for execution of specific job work or contract manufacturing and not for providing manpower. The statutory reverse-charge arrangement under Serial No. 8 of Notification No. 13/2012-ST dated 20.06.2012 did not alter the character of the activity.

Conclusion: The activity did not fall under Manpower Recruitment or Supply Agency Service and the demand was unsustainable; the appellants succeeded.

Ratio Decidendi: A contract for doing specified processing or manufacturing work, where the contractor retains control over its workers and payment is linked to work performed, is not a contract for supply of manpower and cannot be classified as Manpower Recruitment or Supply Agency Service.

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