2023 (9) TMI 652 - AT - Service Tax

Classification of services - providing series of services like breaking the upper cover of shell of castings by pneumatic hammer and also drilling for removal of upper cover and separating each of the pieces in the welding and reduction of size of scrap pieces - to be classified under Manpower Recruitment or Supply Agency Service or not - HELD THAT - There is no dispute that the appellant have provided particular job of wax repairing and assembly department work for M/s Intricast Private Limited. In view of the invoice raised by appellant and work order it is absolutely clear that the appellant was assigned a particular job of various activities and the consideration for the same was fixed and paid on per KG basis. As per the terms of the contract the service recipient has not been given the Man Power the service recipient is concerned only for a particular processing assigned by them to the appellant irrespective of nature of man power quantum of man power - the appellant have not provided the Man Power Recruitment or Supply Agency Service whereas they have provided the service of Business Auxiliary Service i.e. production or processing on behalf of their clients. In view of the various judgments which is on the identical issue and the facts involved in the present case the Tribunal/ High Court has taken a consistent view that when the agreement between the service provider and recipient is for a particular job and not for supply of man power the activity cannot be classified under Man Power Recruitment or Supply Agency Service . In respect of identically placed assessee Shri Rajesh C. Pipadia the learned Commissioner (appeals) has dropped the demand vide Order No. OIA No. RJT-EXCUS-000-APP-132- 14-15 dated 30.07.2014 and the said order was accepted by the Revenue and no further appeal was filed. This order is also a strong persuasive value in the present case for the reason that in this case also the identical activity was carried out by the assessee for the same service recipient M/s Intricast Private Limited. The demand in the present case is not sustainable. Accordingly the impugned order is set aside - Appeal allowed.

Summary

Issues Involved:

1. Classification of services provided by the appellant.
2. Applicability of 'Manpower Recruitment or Supply Agency Service'.
3. Invocation of the extended period of limitation.

Summary:

1. Classification of Services Provided by the Appellant:
The appellant engaged in activities such as breaking the upper cover of shell castings, drilling, and reducing the size of scrap pieces for M/s Intricast Private Limited. The department issued a show cause notice alleging that the appellant provided 'Manpower Recruitment or Supply Agency Service', making them liable for service tax. The adjudicating authority dropped the proceedings, stating that the appellant executed lump sum work/job work, which does not fall under 'Manpower Recruitment or Supply Agency Service'. However, the Commissioner (Appeals) reversed this decision, leading to the current appeal.

2. Applicability of 'Manpower Recruitment or Supply Agency Service':
The appellant argued that the payment received was based on the quantum of work performed, not on a man-hour or man-day basis, thus not constituting 'Manpower Recruitment or Supply Agency Service'. The work orders and invoices indicated that the appellant was paid per KG of castings processed, and the service recipient had no control over the manpower used by the appellant. The Tribunal found that the appellant provided 'Business Auxiliary Service' related to production or processing on behalf of their clients, not 'Manpower Recruitment or Supply Agency Service'. This conclusion was supported by several judgments, including Dhanashree Enterprise, Ritesh Enterprise, and Seven Hills Construction, which established that contracts for specific jobs do not classify as manpower supply services.

3. Invocation of the Extended Period of Limitation:
The appellant contended that the Commissioner (Appeals) had no jurisdiction to invoke the extended period of limitation solely because the appellant had not registered under 'Manpower Recruitment or Supply Agency Service'. The Tribunal agreed, noting that the lapse in registration did not constitute deliberate action to avoid paying service tax.

Conclusion:
The Tribunal concluded that the appellant provided 'Business Auxiliary Service' and not 'Manpower Recruitment or Supply Agency Service'. The demand for service tax under the latter category was not sustainable. The appeal was allowed, and the impugned order was set aside.