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Service ​​Provider Deploying Employees In Manufacturing Premises For Specified Job Works Can’t Be Held As Manpower Supply Services: CESTAT

Mariya Paliwala
15 March 2023 7:30 AM GMT
Service ​​Provider Deploying Employees In Manufacturing Premises For Specified Job Works Can’t Be Held As Manpower Supply Services: CESTAT

The Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that where the service provider has deployed his employees in the assessee's manufacturing premises for specific job works, it cannot be considered manpower supply services.

The two-member bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) has observed that the supply of manpower for any purpose by an individual or proprietary firm, Hindu Undivided Family, or partnership firm, whether registered or not, to a business entity registered as a body corporate is liable to pay service tax.

The appellant/assessee is a manufacturer registered under Central Excise for manufacturing railway sleepers falling under chapter heading 68109990 of the Schedule to the Central Excise Tariff Act, 1985. The appellant is also registered with service tax under the category of Goods Transport Agency.

An inquiry was launched by the Superintendent of Central Excise seeking details of the payment of service tax under reverse charge on specified services as per notification number 30/2012-ST dated June 20, 2012, for the services received by Balaji Udyog Ltd. The appellant replied that the services provided by them were not manpower supply but job work. However, the appellant stated that they have paid service tax on 75% of the value for the month of September 2013 on the job charge service received from three small service providers availing exemption under notification dated 20.6.2012.

The jurisdictional officer issued the show cause notice dated March 14, 2014, seeking to demand service tax along with interest and impose a penalty under Sections 76 and 77 of the Finance Act, 1994. The show cause notice was adjudicated in the original dated 28.5.2015, in which the demand was confirmed and the amount already paid by the noticee was appropriated. The penalties were also imposed. The Commissioner (Appeals) upheld the order passed by the adjudicating authority and rejected the appeal filed by the appellant.

The appellant contended that M/s Balaji Udyog Ltd. did not provide manpower supply service and had carried out job work for concrete railway sleepers. They have charged service tax in respect of the said service of job work from the appellant.

The tribunal held that the agreement clearly indicates that the service received is job work. The analysis of the invoices raised by the service provider to the appellant, along with the statement of the job work done by them, also shows that the appellant was receiving job work service from this service provider. It is not material to rely on the definition of the service indicated by the service provider in the GAR 7 challans when the agreement between the appellant and the service provider is crystal clear.

Case Title: M/s Donypolo Udyog Ltd Versus Commissioner, Central Excise & Service Tax, Indore

Citation: Service Tax Appeal No. 50649 Of 2017

Date: 13.03.2023

Counsel For Appellant: Ankur Upadhyay

Counsel For Respondent: Rajeev Kapoor

Click Here To Read The Order

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