TaxTMI 
TaxTMI 
2026 (3) TMI 1639
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....ous operations. As all materials, including power, were allegedly supplied and controlled by L&T, the department was of the view that the consideration paid to the appellants was towards supply of manpower and was taxable under the category of 'Supply of manpower'. Accordingly, Show Cause Notices dated 14.08.2014 were issued demanding service tax of Rs. 1,86,049 and Rs. 16,511 respectively, along with interest and penalty,. The demands were confirmed with equal penalty under Section 78 of the Finance Act, 1994. The appeals against these orders were rejected by the Commissioner (Appeals), leading to the present appeals. 3. The learned Advocate Shri N. Viswanathan appeared for the appellants and Ld. Authorized Representative Smt. G. Krupa appeared for the respondent. 3.1 Shri N. Viswanathan the Ld. Counsel for the appellants submitted as follows: 1. The appellants are independent contractors who undertook fabrication of towers for L&T under work orders providing payment on quantity/tonnage for specified job work activities. 2. The work orders required compliance with labour laws, VAT registration and payment of VAT, expressly stated that no service tax was app....
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....he OIO that the contractors "brought only workmen" is factually incorrect and contrary to the contractual terms. The appellants were engaged for specified fabrication activities, with consideration linked to quantity/tonnage of work executed, and not on the number of workmen or time basis. The contracts were not for supply of labour simpliciter. The Revenue's reliance on the use of the assessee's premises, materials, power or machinery is legally untenable. It is well settled that execution of job work at the principal's premises using the principal's materials does not, by itself, convert a job/works contract into manpower supply. What is determinative is whether the contractor retains responsibility for execution of the work and deployment of labour, which, in the present case, clearly rests with the appellants. 6. A similar issue, involving an identical work order, was examined by this Bench in M/s. Larsen & Toubro Ltd. Vs Commissioner of GST & Central Excise [Final Order Nos. 40335-40338/2026 dated 09.03.2026] which was authored by one of us, [Shri M. Ajit Kumar, Member (Technical)], for the Bench. As the issues are identical and have already been examined from the perspecti....
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....antly, their salaries were paid by the treasurer from the funds provided by the bank. It was held that the bank manager had the same degree of control over the nominees as he did over numerous other employees, and thus an employer-employee relationship existed. The bank also had the right to select bank personnel who would have the authority to supervise how the cash department conducted its work. The court concluded that the cashier was an employee of the bank. The scope of indirect employment was expounded as under: "If a master employs a servant and authorises him to employ a number of persons to do a particular job and to guarantee their fidelity and efficiency for a cash consideration, the employees thus appointed by the servant would be equally with the employer, servants of the master." (emphasis supplied) (iii) While Shivanandan Sharma (supra) was the first instance of the control test being applied, an important step in the test's evolution was in Dharangadhara Chemical Works Ltd. Vs State of Saurashtra reported in (1957) 1 LLJ 477. The dispute was whether agarias (salt workers) were employees and whether the claim under the Industrial Disputes A....
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....61 (Privy council). In Silver Jubilee (supra) reliance was placed on a combination of the organisation test (also known as the integration test) as interpreted in the Market Investigations Ltd. (supra), Cassidy. (supra), Montreal Locomotive Works (supra) and the control test used in India. (ii) The organisation test looks at the degree of integration in the work committed in the hirer's primary business with the understanding that the higher the level of integration, the more. likely the worker is to be an employee. A combination of control and integration tests allows the professional workers to be classified as employees, notwithstanding a lack of control over the manner of work. Furthermore, the existence and potential use of factors beyond the control and integration in future cases was also recognised. This opened the path for the multifactor test. 3. Multiple Factor test (i) The multifactor test includes: a) Control b) Ownership of the tools c) Integration/Organisation d) Chance of profit e) Risk of loss f) the master's power of selecting his servant g) The payment of wages or other ....
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....ontract of service and a contract for service. After analysing Market Investigations Ltd. (supra), Cassidy (supra) and Montreal Locomotive Works (supra), the multifactor test was reiterated, consisting of the following factors: a) Control over the work and manner in which it is conducted b) Level of integration into employers' business c) Manner in which remuneration is disbursed to workers d) Economic control over workers e) Whether work being conducted is for oneself or a third party (iii) In Sushilaben (supra) priority was given to factors of control and mode of remuneration, noting these would ordinarily suffice to identify the true nature of the relationship unless other contractual terms indicated otherwise. (iv) In Sushilaben (supra) the articulation of the control test has been given importance as it varies from that in Balwant Rai Saluja Vs Air India Ltd. reported in 2014 9 SCC 407. This was elucidated as under: "The three-tier test laid down by some of the English judgments, namely, whether wage or other remuneration is paid by the employer; whether there is a sufficient degree of control by the e....
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....ature of service being provided. . ." (emphasis added) 8. Although the burden of proof lies on the Revenue, the SCN dated 15.10.2014 neither contains extracts of the contract or work order nor treats them as relied-upon documents, despite these being the best evidence of the nature of work performed. The SODs are similarly deficient. The appellant has however submitted a few copies of the workorder along with their appeals. The terms of service as per the contract has however been examined by the Commissioner in an earlier contract between one contractor (G. Velmurugan) and the Appellant (L&T - TLTRs). In that case, it was alleged by revenue that services rendered during April 2014 to March 2015 fell under "manpower supply services." The appellant contends that the contracts in the present cases are identical and has submitted a comparative chart in the 'Synopsis' filed during the public hearing and is reproduced below: S. No. Clauses of work order as per OIA No. 64/2018/Audit II Dated 08.03.2018 Clauses as per L&T (ECC Workshop) work orders. [Work Order for C. Mani Construction - Page No. 62 of Appeal No. ST/41823/2018] 1 Work order is issued for u....