Fabrication Job With Help Of Labour Can’t Be Manpower Recruitment Or Supply Agency Service: CESTAT
Mariya Paliwala
12 Sep 2023 3:47 AM GMT
The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that carrying out a job of fabrication with the help of labour cannot be classified as manpower recruitment or supply agency service.The bench of Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member) has observed that the assessee had been assigned the job of fabrication by the...
The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that carrying out a job of fabrication with the help of labour cannot be classified as manpower recruitment or supply agency service.
The bench of Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member) has observed that the assessee had been assigned the job of fabrication by the service recipient, and the assessee has been charged on the basis of the quantum of the job and not on the basis of the number of manpower or man hours. Therefore, irrespective of the number of manpower or man hours involved in the job to be carried out, the assessee is under obligation to complete a job of fabrication as assigned to him; therefore, in this arrangement, it cannot be said that the appellant has provided the service of manpower recruitment or supply agency service.
The department has classified the service of the appellant/assessee under manpower recruitment or supply agency service and demanded the service tax only on the ground that in some of the invoices the appellant has mentioned labour charges.
The appellant/assessee has not provided the manpower; they have undertaken the job of fabrication of various types, and they have charged their customers as per KG or per piece.
The assessee contended that the activity of the appellant does not fall under the category of manpower recruitment or supply agency service. The assessee referred to the invoice copies and a letter from the service recipient to submit that, as per these documents, it is clear that the appellant has not provided the manpower recruitment or supply agency service.
The tribunal noted that the important aspect to be seen is whether there is a supply of manpower alone without concern for any job with the manpower supplier, and the charges for it have to be strictly on the basis of the number of manpower and the wages to be paid to them, which is not the case in the present case.
The CESTAT noted that as per the arrangement between the appellant and the service recipient, the service of the appellant does not fall under the category of manpower recruitment or supply agency service. However, IT is classifiable under ‘Business Auxiliary Service under the subcategory of production or processing on behalf of the client. Since demand was not raised under ‘Business Auxiliary Service, the demand will not sustain itself for this reason alone. The service recipients were paying excise duty on their final product; for this reason, the appellant’s activity is otherwise exempted under Notification No. 08/2005-ST.
Case Title: Hitech Industries Versus C.S.T.-Service Tax – Ahmedabad
Case No.: Service Tax Appeal No. 12743 of 2014 - DB
Date: 29.08.2023
Counsel For Appellant: Dhaval K Shah
Counsel For Respondent: Ajay Kumar Samota
