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2019 (10) TMI 1245 - AT - Service TaxNature of activity - sale or service - appellant were required to carry out the process of converting the raw-material into detergent/cake in the factory premises of M/s Nirma Ltd, Bhavnagar - manpower supply services or not - whether the appellant is liable to pay service tax or the activity carried out, constitutes manufacturing activity? - Revenue Neutrality - HELD THAT:- The ultimate activity which is to be performed by the appellant is to convert rawmaterial and packing material into packed detergent/cake irrespective of the fact whether the same is carried out in the appellant’s premises or at the premises of the service recipient i.e. M/s. Nirma Ltd. Even as per the agreement the clear understanding between the appellant and M/s Nirma Limited is not for supply of man power but to carry out manufacturing activity of detergent/cake, therefore, in our view it is clear contract of manufacturing of excisable goods. There is no dispute that the appellant after carrying out the manufacturing handed over the excisable goods to M/s. Nirma Ltd who ultimately cleared the said goods on payment of excise duty - there is no contract between the appellant and M/s. Nirma Ltd for supply of man power. The activity carried out by the appellant is at the most considered as “production or processing of goods on behalf of the client” which is covered under the service head of “Business Auxiliary Service”. If this be so, then the service is exempted under N/N. 8/2005-ST. Since, the demand was raised under wrong head i.e. Man Power Recruitment and Supply Agency Service, for this reason also the demand is not sustainable. Reliance can be placed in the case of RAMESHCHANDRA C. PATEL VERSUS COMMR. OF SERVICE TAX, AHMEDABAD [2011 (11) TMI 415 - CESTAT, AHMEDABAD] from it can be settled that when the contract between the service provider and service recipient is admittedly of contract manufacturing in such case demand under man power supply cannot be made. Revenue neutrality - HELD 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. Appeal allowed - decided in favor of appellant.
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