TMI Blog2009 (12) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee and the recipient of the services. An identical view was taken by the Supreme Court in different cases. The said ratio also applicable in this case. The entire tenure of the agreement and the purchase order issued by the service recipient clearly indicated the execution of a lump sum work. The lump sum work would not fall under the category of ‘providing of service, or supply of manpower temporarily or otherwise, either directly or indirectly. Accordingly, the impugned order raising demand and imposing penalty was liable to be set aside, and appeal was to be allowed. - ST/627 OF 2009 AND ST/STAY/378 OF 2009 - 1447 OF 2009 - 1699 OF 2009 - Dated:- 3-12-2009 - M.V. RAVINDRAN, JUDICIAL MEMBER AND P. KARTHIKEYAN, TECHNICAL MEMBER M.S. Nagaraja for the Appellant. M. Vivekananada for the Respondent. ORDER M.V. Ravindran, Judicial Member - This appeal is filed by appellant against the impugned Order-in-Appeal No. 173/2009, dated 8-5-2009. 2. We find that the issue involved in this case being in a narrow compass, hence stay application is allowed and appeal taken up for disposal. 3. The relevant facts that arise for consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such manpower to clients would be covered within the purview of service tax. 22.3 In these cases, the individuals are generally contractually employed by the manpower supplier. The supplier agrees for use of the services of an individual employed by him to another person for a consideration. The terms of the individual's employment may be laid down in a formal contract or letter of appointment or on a less formal basis. What is relevant is that the staff are not contractually employed by the recipient but come under his direction. 22.4 Service tax is to be charged on the full amount of consideration for the supply of manpower, whether full-time or part-time. The value includes recovery of staff costs from the recipient e.g. salary and other contributions. Even if the arrangement does not involve the recipient paying these staff costs to the supplier (because the salary is paid directly to the individual or the contributions are paid to the respective authority) these amounts are still part of the consideration and hence form part of the gross amount. 22.5 Gem and Jewellery Export Promotion Council have represented seeking clarification that hiring of skilled artisans for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the execution of work and were responsible for the complete execution of the work. It is his submission that appellants have received compensation as per the quantity of the work executed by them under each head of work and the rates specified for each item of works in the work order. It is his submission that the findings of the learned adjudicating authority relying upon the Board Circular dated 27-7-2005 to conclude that the staff/labourers are employees of the appellant and the employer and employee relation exists between the manpower supply agency and labourers and not between the labourers and recipients of services. (Aspin Wall Co. and CWC), hence, the service is of manpower, is erroneous on the ground that the work order do not contain any reference, whatsoever, for supply of manpower. The pith and substance of the works orders was "execution of work". The contractors i.e., appellants herein had executed the work in terms of work orders he would rely upon the following decisions for the proposition that the essence or substance in a contract is material for determination of the nature of transaction: (a) Super Poly Fabriks Ltd. v. CCE [2008] 14 STT 249 (SC). (b) Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Act. He would draw our attention to the Master Circular dated 23-8-2007 more specifically to paragraph No. 010.02 which is in respect of supply of manpower. He would read extensively from the said clarification. 6. It is his submission that the abovesaid clarification was given by the Board by issuing a circular combining all the Board Circulars issued till date. It is his submission that it is on record at the individuals are not contracted with the service recipient and neither the service recipient pays salary to the individuals but pays lump sum amount to the appellants herein who maintain employer and employee relations with the persons who are working in the godown and warehouse of M/s. Aspin Wall Co. He would reiterate the findings of the adjudicating authority. 7. We have considered the submissions made at length by both sides and perused the records. The question that arises for consideration is whether the services rendered by the appellant are classifiable under the heading "Manpower recruitment supply agency"? 8. The definition of the manpower recruitment or supply agency under section 65(68) reads as under:— "any commercial concern engaged in prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of this work order. However the company reserves its right to extend the same for further period on mutual agreement." The company is at liberty to enter into parallel contract with any other party, if required. The overall interest of the company should be safeguarded by you and loss/damage to the company due to your negligence/fault shall be recovered from you. Proper accounts of the cargo/empty bags shall have to be furnished to us on completion of each operations. You have to arrange round the clock work in the plant and keep in touch with our officials, supervisors for better coordination in arrival of bulk prompt standardization etc. The labour utilized by you for the handling operations under this work order shall be treated as your employees and the company shall have no responsibility whatsoever in this regard. You shall comply with all statutory requirements, Government regulations etc. and shall fully indemnify the company against any claims. All levies, taxes, charges as per statute in connection with this work order shall be borne by you. Only 90 per cent of the charges at the maximum will be paid to you for the completed work on weekly basis. The balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l under the category of providing of service of supply of manpower temporarily or otherwise either directly or indirectly. 10. On perusal of the records and the submissions of learned SDR on the Master Circular dated 23-8-2007, we find that the issue raised at clause 010.02 is as under: Business or industrial organizations engage services In the case of supply of man power individuals are contractually employed by the manpower recruitment or of manpower recruitment or supply agencies for temporary supply of manpower which is engaged for a specified period or for completion of particular projects or tasks. In the case of supply of man power individuals are contractually employed by the manpower recruitment or supply agency. The agency agrees for use of the services of an individual, employed by him, to another person for a consideration. Employer-employee relationship in such case exists between the agency and the individual and not between the individual and the person who uses the services of the individual. Whether service tax is liable on such services under manpower recruitment or supply agency's services [Section 65(105)(k)] Such cases are cover ..... X X X X Extracts X X X X X X X X Extracts X X X X
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