2009 (12) TMI 152 - AT - Service Tax

Tribunal rules in favor of appellant, exempting them from service tax under 'manpower agency' category.

SS. Associates Versus Commissioner of Central Excise, Bangalore

SS. Associates Versus Commissioner of Central Excise, Bangalore - [2010] 24 STT 592 (BANG. - CESTAT), 2010 (19) S.T.R. 438 (Tri. - Bang.) Issues Involved:1. Classification of services rendered by the appellant.2. Applicability of service tax on the services rendered.3. Interpretation of the contract between the appellant and the service recipient.4. Reliance on CBEC circulars and Master Circular for classification.5. Limitation and statutory compliance by the appellant.Issue-wise Detailed Analysis:1. Classification of Services Rendered by the Appellant:The primary issue was whether the services rendered by the appellant fell under the category of 'manpower recruitment & supply agency.' The appellant argued that the contract was for executing specific tasks such as loading, unloading, stacking, and weighing, and not for supplying manpower. The adjudicating authority, however, classified the services under 'manpower recruitment and supply services,' leading to the demand for service tax, interest, and penalties.2. Applicability of Service Tax on the Services Rendered:The adjudicating authority concluded that the appellant was liable for service tax under 'manpower recruitment & supply agency' services. The appellant contested this, arguing that the contract with M/s. Aspin Wall & Co. was a works contract, not for supplying labor. The Tribunal examined the definitions under section 65(68) and section 65(105)(k) of the Finance Act, 1994, which require the activity to involve recruitment or supply of manpower. The Tribunal found that the appellant's contract was for executing specific tasks and not for supplying manpower, thus not attracting service tax under the said category.3. Interpretation of the Contract Between the Appellant and the Service Recipient:The Tribunal analyzed the contract terms, noting that the essence of the contract was the execution of work, not the supply of manpower. The Supreme Court's rulings in similar cases, such as Super Poly Fabriks Ltd. and Kone Elevators (India) Ltd., were cited to emphasize that the substance of the contract is crucial. The Tribunal concluded that the contract was for lump-sum work and not for supplying manpower, thus supporting the appellant's argument.4. Reliance on CBEC Circulars and Master Circular for Classification:The adjudicating authority relied on CBEC Circular No. B1/6/2005-TRU and the Master Circular dated 23-8-2007 to classify the services. The Tribunal found that these circulars were not applicable as they pertained to the supply of manpower, whereas the appellant's contract was for executing specific tasks. The Tribunal held that the reliance on these circulars did not support the revenue's case.5. Limitation and Statutory Compliance by the Appellant:The appellant argued that the show-cause notice was time-barred and that they were registered under different service categories, with the department being aware of their activities. The Tribunal did not delve into this issue, as the appeal was decided on the merits of the service classification.Conclusion:The Tribunal set aside the impugned order, concluding that the services rendered by the appellant did not fall under 'manpower recruitment & supply agency' and thus were not liable for service tax under that category. The appeal was allowed with consequential relief, and no findings were recorded on other submissions due to the decision on the primary issue.