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2015 (3) TMI 1170 - HC - Service TaxDemand of Service tax alongwith interest - Section 73 of the Finance Act 1994 - Manpower Recruitment or Supply Agency Services - Act of harvesting of sugarcane and transporting the same from the fields of the concerned farmers to the sugar factories site - Held that - there is no supply of labour to the sugar factory concerned. The respondents have undertaken the activities of harvesting of sugarcane and transporting the same to the sugar factory for which labour is employed. Having regard to the nature of contract between the respondents and sugar factory and the scope of definitions 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 . Therefore it is clear that no manpower has been supplied by the respondents to the sugar factory to constitute supply of manpower. - Decided against the revenue
Issues:
- Classification of services under "Manpower Recruitment or Supply Agency Services" for harvesting and transportation activities. Analysis: 1. The Revenue appealed against the order of the Central Excise and Sales Tax Appellate Tribunal, Mumbai, regarding the classification of services provided by private limited companies to sugar factories for harvesting and transporting sugarcane. The Revenue contended that the activities should be classified as "Manpower Recruitment or Supply Agency Services" chargeable to service tax under the Finance Act, 1994. 2. The Revenue argued that the activities of harvesting and transportation could not be completed without the aid of manpower/labour, thus falling under the definition of "Manpower Recruitment or Supply Agency Services." The Revenue claimed that the Appellate Tribunal's classification was incorrect and led to a miscarriage of justice. 3. On the other hand, the respondents, private limited companies, maintained that they facilitated the harvesting and transportation of sugarcane from fields to sugar factories through contractors supplying labor. They contended that their services did not fit under the category of "Manpower Recruitment or Supply Agency Services" as defined in the Finance Act, 1994, and were correctly classified under "Business Auxiliary Services." 4. The key issue revolved around whether the services provided could be categorized as "Manpower Recruitment or Supply Agency Services," as defined in the Finance Act, 1994. The definitions under Section 65(105)(K) and Section 65(68) were crucial in determining the applicability of service tax to the activities in question. 5. The High Court analyzed the definitions provided in the Finance Act, 1994, and concluded that the activities undertaken by the respondents did not involve the supply of labor to the sugar factories. The Court noted that the respondents employed labor for harvesting and transportation, which did not align with the concept of "Manpower Recruitment or Supply Agency Services." 6. Referring to a Supreme Court judgment, the High Court emphasized the importance of interpreting contracts as a whole to ascertain the intent of the parties involved. The Court highlighted that the absence of labor supply from the respondents to the sugar factories was a crucial factor in determining the classification of services provided. 7. The High Court upheld the Appellate Tribunal's decision, stating that the nature of the contract and the lack of labor supply supported the conclusion that the services rendered did not fall under the ambit of "Manpower Recruitment or Supply Agency Services." The Court dismissed the Revenue's appeals, citing a previous judgment that aligned with the current interpretation of the law. 8. Ultimately, the High Court found the appeals to be without merit and upheld the Appellate Tribunal's decision. The Court dismissed the appeals and ruled in favor of the respondents, emphasizing that no manpower supply occurred, thus not constituting "Manpower Recruitment or Supply Agency Services."
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