2023 (12) TMI 79 - AT - Service Tax

Classification of services - Manpower Recruitment or Supply Agency s service or not - executed various jobs entrusted to them in the plants of HEC as per the Work Orders issued by HEC on principal to principal basis - HELD THAT - In order to fall within the definition of the term Manpower Recruitment or Supply Agency service the activity should be for providing any service directly or indirectly in any manner for recruitment or supply of man-power temporarily or otherwise to a client - A perusal of the Work Orders issued by HEC clearly reveals that the Respondent societies executed the jobs as the contractors by engaging the workers from their roll and it further reveals that the job was mentioned in terms of quantity and not based on number of workmen supplied or engaged. The rate was fixed per Ton basis. The agreements as per the Work Orders did not require or specify the number of workers to be employed and the number of days for which the workers would be engaged. It is for the respective Respondent societies to execute the jobs specified in the Work Orders by deploying as many numbers of workers as per its convenience and discretion. The Principal Company HEC was interested only in the execution of the job entrusted to the Respondent societies at the agreed rates and also within the specified time frame. HEC as a responsible Public Sector Company apart from making profit has the social obligation to ensure that the workers employed by the contractors in their factory are not subjected to any exploitation and they are paid their legitimate dues which they are entitled to appropriately and also in time. The wage bills of the workers are not only properly prepared as per Minimum Wages Act but also paid and their CPF ESI etc. are properly deducted and deposited to the respective authorities. This does not means that the man power supplied were under the rolls of HEC. Thus it is observed that the service rendered by the Respondent would not fall within the ambit of Manpower Recruitment Supply Agency as defined under Section 65(68) of the Act read with Section 65(105) (k). In the case of COMMISSIONER OF CUSTOMS CENTRAL EXCISE SERVICE TAX VERSUS M/S. SHRI SAMARTH SEVABHAVI TRUST M/S. AMRIT SANJIVANI SUGARCANE TRANSPORT CO. PVT. LTD. M/S. GODAVARI KHORE CANE TRANSPORT COMPANY (P) LTD. AND M/S. GANESH ARPIT SUGARCANE TRANSPORT PVT. LTD. 2015 (3) TMI 1170 - BOMBAY HIGH COURT it has been held that Having regard to the nature of contract between the respondents and sugar factory and the scope of definitions mentioned above it appears that the Appellate Tribunal has rightly come to the conclusion that the respondent s work though provided services to the sugar factory did not come within the mischief of the term Manpower Recruitment or Supply Agency. By following the decisions cited above it is held that the impugned order has rightly dropped the demands under Manpower Recruitment Supply Agency service and hence the department s appeals are not sustainable. Appeal of Revenue dismissed.

Summary

Issues Involved:
The issue in the present appeals is whether the Respondent societies acted as manpower supply agencies and if the services rendered by them fall within the definition of "Manpower Recruitment & Supply Agency" as per Section 65(68) of the Act read with Section 65(105)(k) and are liable to pay Service Tax or not.

Comprehensive Details of the Judgment:

Issue 1: Nature of Services Rendered by Respondent Societies
The Respondent societies executed various jobs on a principal to principal basis for a company, engaging workers from their own roll. The Department claimed the services were "Manpower Recruitment or Supply Agency" services and demanded service tax. However, the Respondents argued that the services provided were not under this category based on the terms of the work orders.

Decision: The Ld. Commissioner (Appeals) held that the contracts were job-based, not person-based, and the demand of service tax under the category of "Manpower Recruitment or Supply Agency" service was not sustainable. The Appellate Tribunal upheld this decision, noting that the Respondents did not fall within the definition of a "Manpower Recruitment or Supply Agency."

Issue 2: Interpretation of Work Orders
The Work Orders issued by the principal company specified the works to be undertaken by the Respondent societies, with payment based on tonnage and not on the number of workers supplied. The agreements did not mandate the number of workers or days of engagement, leaving it to the discretion of the societies. The principal company ensured compliance with labor laws and proper payment to workers.

Decision: The Appellate Tribunal observed that the service rendered by the Respondents did not fall within the definition of "Manpower Recruitment & Supply Agency" as per the Act due to the nature of the work orders and the execution of jobs by the societies.

Separate Judgment:
The Appellate Tribunal cited various decisions in support of the contention that the Respondents' work did not constitute "Manpower Recruitment or Supply Agency" services. The Tribunal referenced a case where it was held that the services provided did not fall within the definition of this category, emphasizing the absence of labor supply to the principal company.

Decision: By following the precedents cited, the Tribunal concluded that the impugned order rightly dropped the demands under "Manpower Recruitment & Supply Agency" service, leading to the rejection of the department's appeals.