Manpower supply under reverse charge defeats service tax demand where recipients already discharged tax on the same labour supply activity.

Contract labour supplied for packing, loading, unloading, housekeeping and allied work at the recipient's premises was treated as manpower recruitment or supply service because the agreements showed the recipient's manpower requirement, while the appellant remained responsible for wages, labour law compliances and licensing. Under Notification No. 30/2012-ST, as amended, the tax liability for such manpower supply services shifted to the recipient under reverse charge. The record further showed that the recipient-pharma entities had already discharged service tax on the same activity and produced challans and certificates. The service tax demand against the appellant was therefore unsustainable.

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Issues: Whether the appellant's labour supply arrangement was classifiable as manpower recruitment or supply agency service, and whether the service tax demand was unsustainable because the recipient had discharged tax under reverse charge.

Analysis: The agreements were read as a whole and their terms showed that the appellant supplied contract labour for packing, loading, unloading, housekeeping and allied work at the recipient's premises, with the recipient raising manpower requirements and the appellant retaining obligations relating to wages, labour law compliances and licensing. On that footing, the activity was held to be labour supply falling within manpower supply service. The applicable exemption/charge mechanism under Notification No. 30/2012-ST, as amended by Notification No. 7/2015-ST, placed the service tax liability on the recipient for such manpower supply services during the relevant period. The record also showed that the pharma recipients had already paid service tax on the same activity and produced supporting challans and certificates.

Conclusion: The demand against the appellant was not sustainable, as the service was manpower supply and tax had already been discharged by the recipients under the applicable reverse charge mechanism.

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