By TIOL News Service

MUMBAI, MAR 30, 2015: THIS is a Revenue appeal filed against an order passed by the Commissioner (A) in April, 2010.

The issue is regarding the service tax liability of the respondent under the category of "Manpower Recruitment and Supply Agency Service".

The lower authorities came to a conclusion that service tax liability gets confirmed on the respondent for undertaking the activities of cutting/harvesting and transporting of sugarcane to Sugar factory as the assessee is functioning on behalf of the farmers &enters into a contract with labour contractors for arranging manpower for the purpose of harvesting/cutting and transporting of sugarcane to sugar factories.

The adjudicating authority confirmed the demand but the lower appellate authority dropped the same.

The Bench inter alia observed that the issue is no more res integra inasmuch as the issue has been held in favour of the assessee in the case of Godavari Khore Cane Transport Company Pvt. Ltd. - 2013-TIOL-1986-CESTAT-MUM and which decision was upheld by the Bombay High Court - 2015-TIOL-253-HC-MUM-ST and the Revenue appeal was dismissed.

Holding that there is no merit in the Revenue appeal, the same was rejected.

In passing:

The Tribunal - 2013-TIOL-1986-CESTAT-MUM had observed -

ST - Manpower recruitment or Supply agency service - Appellants are private limited companies and entered into contract with labour contractors for cutting and transporting sugarcane through labourers from producer/members supplying the sugarcane to the factory - service brought under the tax net under 'Manpower Recruitment or Supply Agency Service' envisages supply of labour per se - In the instant case there is no supply of labour per se to the sugar factory - Work undertaken is harvesting of sugar cane and transporting the same to the sugar factory for which labour is employed - Sugar cane belongs to the sugar factory in terms of the agreement of sale executed between the farmer and the sugar factory and, therefore, the activity undertaken by the appellant is one of procuring or processing of the goods belonging to the client which is classifiable under 'Business Auxiliary Service' and not under 'Manpower Recruitment of Supply Agency Service' - ratio of Tribunal decision in Amrit Sanjivini Sugarcane Transport Co. Pvt. Ltd. - 2013-TIOL-1097-CESTAT-MUM is fully applicable to the facts of the present case - Order set aside and appeals allowed: CESTAT [para 5, 6]

And the Bombay High Court while rejecting the Revenue appeal had held thus -

ST - Nature of work undertaken by the respondent must be understood in the context in which it was understood by the respondent and its principal-sugar factory - Respondent engaging labour for harvesting of sugarcane & loading it in vehicle and unloading at factory site - services are not 'Manpower Recruitment or Supply Agency Services' - agreement itself is eloquent enough to draw the above conclusion - Revenue appeal dismissed: High Court [ para 6, 7]

(See 2015-TIOL-577-CESTAT-MUM)