2024 (8) TMI 320 - AT - Service Tax

Tribunal Rules Contractor Services Not Manpower Supply; Service Tax Demand Time-Barred, Allows Cenvat Credit.

GUJARAT SIDHEE CEMENT LIMITED Versus COMMISSIONER OF CENTRAL EXCISE-BHAVNAGAR

The Tribunal allowed the appeal, granting consequential relief by determining that the services provided by the contractor were not classified as Manpower ... Liability to pay Service Tax under reverse charge basis - manpower supply services or not - services received from the contractor M/s. Bhola enterprise, who was engaged in undertaking misc. jobs such as preparation of scaffolding for cooler, intel duct for welding, removal of spillage material, housekeeping etc. for the appellant - HELD THAT:- On the similar issue relying on various Judgments, this Court in the own matter of the appellants as reported GUJARAT SIDHEE CEMENT LIMITED VERSUS C.C.E. & S.T. -BHAVNAGAR [2024 (5) TMI 134 - CESTAT AHMEDABAD] has held 'the matter is no more res Integra and the impugned service cannot be held as Manpower Recruitment und Supply Agency Service simply because of the basis of making payment to the contractor.' Thus, as held by the Division Bench of this Tribunal only, the mode of payment is not relevant and impugned order in this case also has period involved from July 2012 to March 2013. Since the activities of the labour was for miscellaneous jobs and labour was under control of contractor. Therefore, same cannot be said to be man power supply - Appeal allowed. Issues involved:1. Liability to pay Service Tax under reverse charge basis for services received from a contractor engaged in miscellaneous jobs.2. Applicability of demand for Service Tax under reverse charge mechanism.3. Invocation of extended period limitation for tax demand.4. Whether the demand is maintainable on merits and time-barred.5. Determination of the nature of the services provided by the contractor.Analysis:1. The primary issue in the present appeal was the liability of the appellant to pay Service Tax under reverse charge basis for services received from a contractor engaged in miscellaneous jobs. The impugned order confirmed the demand of Service Tax on the contractor for a specific period, with a portion of the value sought to be taxed under reverse charge mechanism.2. The appellant contended that the work was given on a lumpsum basis, not for manpower supply but to carry out specific jobs. They argued that the demand was not justifiable under the category of manpower supply, citing relevant case law and CBEC Circular No. 190/9/2015-S.T. They further argued against the invocation of extended period limitation for tax demand, claiming that any tax payable under reverse charge mechanism pertained to production-related activities eligible for Cenvat Credit.3. The appellant relied on various case laws to support their argument against the demand being time-barred, emphasizing a revenue-neutral situation. They cited multiple judgments to strengthen their position, highlighting that the demand was not maintainable on merits and due to the extended period limitation.4. The learned AR reiterated the findings of the lower authorities, emphasizing that the payment made in lumpsum indicated manpower supply only. However, the Tribunal, considering similar issues and past judgments, held that the nature of the services provided by the contractor was not solely manpower supply based on the mode of payment.5. The Tribunal, based on its own precedent and various case laws, concluded that the activities carried out by the labor for miscellaneous jobs, under the control of the contractor, did not constitute manpower supply. Therefore, the appeal was allowed with consequential relief, determining that the impugned service could not be categorized as Manpower Recruitment and Supply Agency Service solely based on the payment method.In conclusion, the Tribunal's decision clarified the nature of the services provided by the contractor, emphasizing that the mode of payment was not determinative of whether the services amounted to manpower supply. The judgment highlighted the importance of considering the actual activities performed and the control over the labor in determining the tax liability under the reverse charge mechanism.