TaxTMI 
TaxTMI 
2025 (12) TMI 1612
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....pellant-1 for dyeing and hydro processes on the yarn on per kg basis. The requisite machinery and equipments and the raw material, consumables etc. for the above processes are also provided by them. The officers also recorded the statements dated 13.09.2011 of Smt. Najadi Devi Durbal Yadav Proprietor of Appellant-1 wherein she stated that her firm is engaged in Jobwork (dyeing and hydro processing) for M/s Valson Polyesters Ltd, Vapi on per kg basis in the premises of the said manufacturing unit. She stated that they are not providing any labour to the company and are doing only job work on textiles which falls under "Business Auxiliary Service" which was exempt in terms of Notification No. 14/2004-ST dated 10.09.2004. 1.1 On the basis of documents collected during investigation, including contracts entered into with M/s Valson Polyesters Ltd, Vapi, the department alleged that during the period from 2009-10 to 2010-11, the Appellant-1 has received consideration of Rs. 49,42,354/- on which they did not pay appropriate service tax. A show cause notice dated 13.06.2014 was issued demanding service tax of Rs. 5,09,062/- (including education cess and secondary & higher education cess....
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....tion, the Additional Commissioner vide OIO dated 30.11.2015 confirmed the above demand of service tax under proviso to Section 73 (1) along with interest under Section 75 and equal penalty under section 78 of the Finance Act, 1994. 2.2 Aggrieved with the above order, the Appellant-1 filed appeal before the Commissioner (Appeals) who vide impugned order dated 20.11.2017, upheld the order of the lower authority and rejected their appeal. Hence, the present appeals before the Tribunal. 3. In their appeal, the appellant-1 took the following grounds:- a) The issues are whether they are providing man power supply service or providing job work services relating to textile processing in the matter and whether they are liable to pay service tax on the amount of consideration received by them? b) As per Section 65(105) (k) of the Finance Act, 1994, a contract for completing textile processing job work within the premises of various textile companies is not covered as man power recruitment or supply agency service. They entered into job work agreement with M/s Valson Polyesters Ltd which is specific and the scope of work to be executed relates to processing of yarn suc....
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....art which is clearly absent. They rely on the decision of Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v The State of Orissa reported in AIR 1970 (SC) 253 and Pushpam Pharmaceuticals Company Vs. CСЕ 1995 (78) ELT 401 (SC). h) The issue in the present case is of interpretation of statutory provisions and therefore, for this reason also, penalty cannot be imposed on them. They rely on the following cases:- * Bharat Wagon & Engg. Co. Ltd. v. Commissioner of C.Ex., Patna, (146) ELT 118 (Tri. - Kolkata), * Goenka Woollen Mills Ltd. v. Commissioner of C.Ex., Shillong, 2001 (135) ELT 873 (Tri. - Kolkata) * Bhilwara Spinners Ltd. v. Commissioner of Central Excise, Jaipur, 2001 (129) ELT 458 (Tri. - Del.) In view of the above, they prayed for allowing their Appeals and setting aside the impugned order. 4. M/s Singh Labour Contractor (Appellant -2) filed appeal before this Tribunal taking the same grounds as in the case of M/s N D Enterprises which for the sake of brevity, are not reproduced. Facts in both the cases are similar and difference is only in respect of processes being undertaken by both the Appellants. The con....
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....nt is covered under manpower supply service and is liable to service tax. 6.1 Regarding time bar issue, he states that the bona fide belief of the Appellants is ill founded as on one hand, they claim to be engaged in Jobwork which amounts to manufacture but at the same time, they claim to be covered by service tax exemption notifications. The appellants were fully aware of the provisions of service tax and knowingly, suppressed the fact of providing services against consideration from the department which Justifies invocation of extended period of limitation. On the same ground, he justifies penalty on the appellants. He relies on the decision of Mumbai Tribunal in the case Viner systems Vs. Commissioner of Central Excise and Customs, Pune - 2005 (191) ELT 105 (Tri.- Mub.) wherein it was held that "blind belief cannot be a substitute for bona fide belief." Similar finding was given by the Tribunal in the case of Camline Ltd Vs. Commissioner of Central Excise, Mumbai-IV reported at 2009(239) ELT 346 (Tri.- Mumbai). He prayed for upholding the orders of the Commissioner (Appeals) by dismissing both the appeals. 7. We have heard both the sides. We find that this Tribunal in the ....
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....ot indicate that the activity of the appellant is of Manpower supply or recruitment service. As per the contract, the appellant is supposed to carry out various textile processing activities for which, payment is fixed on per metre/per kg basis irrespective of the number of manpower deputed for the said job work. This issue has been clarified by the board vide Circular No. 190/2015 - ST dated 15.12.2015. The same is reproduced below: - "Sub:- Applicability of service tax on the services received by apparel exporters in relation to fabrication of garments - reg. It has come to the notice of the Board that certain field formations are taking a view that service tax is payable on services received by the apparel exporters from third party for job work. Apparently field formations are taking a view that the services received by apparel exporters is of manpower supply, which neither falls under the negative list nor is specifically exempt. However, trade is of the view that the services received by them is of job work involving a process amounting to manufacture or production of goods, and thus would fall under negative list [section 66D (f)] and hence would not attrac....
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....xecuted by service provider at the site of service recipient, the service provider would indemnify the service receiver of any loss to inputs and infrastructure g. The employee deployed for the assigned job would be under the control/supervision of the service provider. h. Payment would be at agreed piece rate basis. Plain reading of this agreement makes it an agreement of job work applying the criterion outline in para 2 above. 4. However, every job work is not covered under the negative list. If the job work involves a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944, it would be covered under negative list in terms of Section 66D(f) read with section 65B (40) of the Finance Act, 1994. 5. The issue of applicability of service tax may accordingly be decided taking into account the nature of agreement/contract and the service being provided. 6. All concerned are requested to acknowledge the receipt of this circular. 7. Trade Notice/ Public Notice to be issued. Difficulty if any, in the implementation of the circular should be brought to the notice of the Board. Hindi version....
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....ntrusted to the Jobworker and the Jobworker will properly account for the yarn material as entrusted by the Company and will return the finished product as per specifications. 06 That the Jobworker will do the work in accordance with the sizes, designs and specification as may be given/directed/advised by the Company from time to time. The Jobworker shall adhere to the production schedules made available to him by the Company. If the work done for any of the said goods connected with manufacturing is not up to the required standard and quality of which the Company is the sole judge, the Jobworker shall remake, repair or modify the said goods without any additional remuneration / compensation or consideration or sha compensate the loss, if any, cased to the Company by negligence ( otherwise. 07. That the Jobworker shall take all necessary precautions like a prudent ma and shall abide by law and in case any such damage is caused due to th negligence, carelessness, deliberate act or due to the inefficiency by th Jobworker or its worker(s) then the Jobworker shall be responsible for al losses. Any loss caused or suffered by the Company, the Company ha right to recover the same....
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....customer complaint to the Company regarding material processed by the Jobworker, he shall be liable for all liquidated and calculated damages suffered or likely to be suffered by the Company and the Company shall be entitled to deduct, the amount due, to the Jobworker, if any, or otherwise. 17. The either party can dissolve this agreement by giving one month advance notice to each other during the agreement period. 18. In the event of non-compliance or breach of any terms of the contract or unsatisfactory or inefficient working, the Company will be at liberty to revoke the contract by a week's notice in writing. 19. The Jobworker is liable to indemnify the Company in respect of any cost or claims that may arise at any time during the tenancy of the contract. ANNEXURE - 1 TO AGREEMENT EFFECTIVE 01/07/2009. NATURE/ TYPE OF JOB UNDER TAKEN RATE PER K.G. (IN RUPEES) (1) Dyeing Process of Yarn 1.25 (2) Hydro Process of Yarn 1.00 (3) (4) (5) SIGNED FOR AND ON BEHALF OF M/S. VALSON POLYESTER LIMITED, SIGNED FOR AND ON BEHALF OF M/S. N. D. ENTERPRISES N.D. (GENERAL MANAGER) (PROPRIETOR) Document 2 ANNEXURE - 1 TO AGREEMENT EFFECTIVE 01/04/20....