TaxTMI 
TaxTMI 
2023 (11) TMI 372
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....service under the category of "Manpower Recruitment and Supply Agency Service" and it was pointed out that appellant have not discharged the service tax liability on the income earned from M/s. GMDC by providing Manpower Recruitment and Supply Agency Service. It was further noticed by the department that the appellant have been undertaking job work of converting bauxite into calcined bauxite for M/s. Saurashtra Calcine Bauxite & Allied Industries Limited (SCABAL for short) and since they have not obtained any permission for direct despatch of finished goods from the job work premises to various party"s clients, they should have discharged service tax liability under Business Auxiliary Services. Accordingly a show cause notice dated 12.07.2012 came to be issued to the appellant demanding service tax of Rs. 1,65,31,586/- under the category of Manpower Recruitment and Supply Agency Service and amount of Rs. 36,44,228/- under Business Auxiliary Services and an amount of Rs. 947/- under renting of Immovable Property has been demanded invoking the provisions of section 73 of Finance Act, 1994. The other provisions with regard to interest and penalty under Sections 75, 76, 77 and 78 of th....
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....pply Agency Service. The following case laws have been relied upon by the appellant:- (a) Ritesh Enterprises vs. CCE, Bangalore - 2010 (18) STR 17 (b) Sureel Enterprises Pvt. Limited vs. CCE & ST Ahmedabad- 2019 (10) TMI 1245 (c) Sureel Enterprises Pvt. Limited vs. CCE & ST Ahmedabad -2021 (5) TMI 802 (d) Nishkarsh Industrial Services vs. CCE & ST, Vadodara 1 - 2022 (9) TMI 901 (e) Pranav Oxygen vs. CCE & ST - 2020 (1) TMI 309 (f) Manish Enterprises vs. CCE, Pune - 2010 (18) STR 17 3. The learned advocate has also placed reliance on the CBEC Circular No. B1/6/2005 dated 27.07.2005 and Circular No. 97/7/2007 dated 23.08.2007 which explicitly clarifies that demand under the category of Manpower Recruitment or Supply Agency Service can be confirmed only in case where agreement/ contract entered between two parties are for supply of manpower. It has been the contention of the learned advocate that in the present case, the work order provided by the GMDC nowhere mentions that appellant are engaged for Recruitment and supply of manpower on behalf of M/s. GMDC. It has been further mentioned that entire contract and work orders were ....
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....s. SCABAL is also legally not tenable. It has been contended that the process of conversion of raw bauxite into calcinated bauxite where saw-bauxite is classifiable under Chapter heading 26060010 while the calcined bauxite is classifiable under Chapter heading 26060020 and thus, such an activity results into emergence of a new substance classifiable under a separate tariff heading and therefore same amounts to manufacture, consequently no service tax is payable on such activity. The learned advocate has drawn out attention to the definition of Business Auxiliary Service and the Circulars in this regard issued by CBEC from time to time. It is clear that the government did not want to tax those activities which results into "manufacture" of a new substance as per the definition given under Section 2(f) of Central Excise Act, 1944. It has further been added that word "manufacture" has defined under Central Excise Act includes within its scope "any process incidental or ancillary to completion of manufactured product, provided as long as the process results into emergence of new and identifiable product having distinctive name, character or use". Similarly, Section 2(d) of Central Exci....
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....e has been issued to them invoking extended time proviso under Section 73(1) of the Finance Act, 1994. It has been emphasized that the extended period of time limit is not invokable in their case as there is no suppression of facts with intent to evade payment of service tax. Learned advocate has drawn out attention to earlier audits which were conducted by the department vide audit report dated 02.12.2012 which covered the period from 01.04.2007 to 31.03.2008 and where no objection was raised by the department. Similarly, for the period covering April 2008 to March 2010 another audit was conducted and audit report No. L-116/2010-11 dated 26.10.2010 was issued to the appellant under which no objection was raised by the department. It has also been mentioned that appellants have regularly been filing their ST-3 return giving all the details and therefore, it is wrong on the part of the department to allege the suppression or mis-declaration of facts with an intention to evade payment of service tax. Learned advocate relied upon the following decisions in this regard:- (a) NRC Ltd. Vs CCE, 2007 (5) STR 308 (b) Town Hall Committee Vs Commissioner, 2007 (8) STR 170 ....
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....in the prices of Furnace of Diesel, pet-coke, labour material, fuel, energy on any other consumables required for the production of Calcined bauxite or any other taxes / cess / levies imposed by State / Central Government Service tax if applicable, as per Govt. rules to be borne by you. It can be seen from the above work order and the terms, on the basis of which the appellant have rendered the services to M/s. GMDC. The activity covers crushing, screening, calcinations plant operation and proper stacking of calcined bauxite etc. The appellant was required to manufacture/ produce certain quantities of calcinated bauxite as mentioned in the above work order. For this work the rate which have been provided by the service recipient namely M/s. GMDC is of Rs. 1931/- per MT for calcinated bauxite produced by the appellant. Before proceeding further, it will be proper to have a look at the definition of Manpower Recruitment or Supply Agency Service as provided under Section 65 (68) of the Finance Act, 1994:- "Manpower recruitment or supply agency means any commercial concern engaged in providing any services, directly or indirectly, in any manner for recruitment or supply ....
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.... at all the appellant is liable to pay service tax the same is available as cenvat credit to the service recipient i.e. M/s. Nirma Ltd. In this regard, he also submitted the details of payment of excise duty of M/s. Nirma Ltd from PLA/cash. This prima facie show that it is a case of Revenue neutral and by not paying the service tax by the appellant the Government Exchequer is not at any loss, however, since, we have already decided the issue on merit, we are not giving our concluding opinion on Revenue Neutral position. The issue of jurisdiction raised by the appellant is also kept open. 8. As per our above discussion the impugned order is not sustainable. Hence, the same is set aside. The appeals are allowed with consequential relief, if any, in accordance with law". 11.1 In view of the above discussion and decision as stated in the preceding paras, we are of the view the service rendered by the appellant to M/s. GMDC does not fall under the category of Manpower Recruitment and Supply Agency Service and therefore, we find no merit in the order in original in this regard. 12. With regard to confirmation of demand service tax under Business Auxiliary Service, the fact....