By TIOL News Service

MUMBAI, JUNE 01, 2017: BY an agreement dated 01.01.2002, the appellant had accepted to undertake job-work in the premises of M/s Sunflag Iron & Steel Co Ltd.

Scope of work warranted that the appellant should engage his own labour and do the activity as agreed upon in clause No. (3) of the said agreement.

The issue that arises for consideration is whether the appellant has rendered the services of ‘Manpower recruitment and supply agency services' during the period 16/06/2005 to 01/01/2009 and whether they are liable to service tax or otherwise.

After considering the submissions made by both sides, the Bench observed thus -

"On perusal of the agreement we find that in clause no. 19/20 the rates are fixed for the lumpsum job-work that is to be undertaken by the appellant. We find that the appellant has undertaken the work of conversion of the raw material into finished goods within the factory premises of M/s Sunflag Iron & Steel Co. Limited and the said conversion charges are calculated and being paid on per MT and on lumpsum basis. We have perused the specimen invoice attached along with the appeal memorandum and find that the said invoice indicates that the appellant is charging for the converted finished goods from the raw material supplied and on labour supplied."

Noting that similar issue has already been decided by the Tribunal in the case of Shivshakti Enterprises - 2015-TIOL-2589-CESTAT-MUM and D S Chavan Engineering Works - 2015-TIOL-2691-CESTAT-MUM and wherein it is held that no tax liability arises under the category of ‘Manpower recruitment or supply services', the CESTAT held that the impugned order is not sustainable.

The appeal was allowed.

(See 2017-TIOL-1826-CESTAT-MUM)