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2023 (12) TMI 75 - AT - Service TaxClassification of service - Supply of Manpower Service or not - Partial reverse charge mechanism - Notification No. 30/2012-ST dated 20.06.2012. Relying upon Section 68 of the Finance Act, 1994 read with Notification No. 30/2012-ST dated 20.06.2012 demand has been made under partial reverse charge mechanism, treating these supplies as taxable services under the category of ‘Manpower Supply Agency Services”. HELD THAT:- The invoices raised against the contracts are not for supply of labour but are for supply of material. Work done under these contracts is for undertaking a work activity involving supply of material also. Then on what basis revenue could have concluded that these activities amounted to ‘Supply of Manpower Service’ to the appellant for demanding service tax - as per the General Terms and Conditions of the appellant’s agreement, all these are works contract involving supply of material and labor. They cannot be in any case to be treated as supply of manpower. In the present case the demand has been made during the services received as Manpower Supply Services. On perusal of the documents and invoices it is found that in none of invoice has service tax of 25% for the supply of Manpower Services as required by the above notification has been paid by the service provider. The demand of 75% has been made by the recipient of the service. It is not available anywhere on the record whether any notices or any demands have been issued to the service provider, in terms of notification for payment of 25% of service tax for Supply of Manpower Services. The present services do not qualify as Manpower Supply Service, as it is associated with supply of material also, it is a work contract service which has been defined by Section 65 (54) of the Finance Act, 1994 as amended by Finance Act, 2012. In respect of the Works Contract Services the charge of service tax is on the service provider and not on the service recipient in terms of the above provisions. Accordingly, the demands made by the revenue by invoking the provisions of Section 68 (2) do not stand in the test of law. Accordingly, these demands are to be set aside. The contract/ agreement entered between the parties should be read as whole and understood as whole. There is no scope for interpreting the agreement differently from what has been stated in the contract/ agreement. A work contract agreement will involve supply of services for which certain manpower will be deployed. Just for the reason that the manpower was deployed by the appellant nature of agreement cannot be changed from the one that was intended between the contracting parties. There are no merits in the impugned order - appeal allowed.
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