Service for transportation of raw bauxite as well as operation and maintenance of bauxite calcination plant not taxable under category of “Manpower Recruitment or Supply Agency Service”: CESTAT [Read Order]

The Ahmedabad Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that the service for the transportation of raw bauxite, as well as the operation and maintenance of the bauxite calcination plant, is not taxable under the category of manpower recruitment or supply agency service. Meena Agency Limited, the appellant, is engaged in providing various services and is registered for mining service, Goods Transport service, Business Auxiliary Services, Renting of Immovable Property services, etc. The appellant had raised multiple bills describing services as "Production cost for the Calcined bauxite produced at Gadhsisa Calcination Plant," which the audit party noticed during the departmental officer's audit of the statutory records of M/s. Gujarat Mineral Development Corporation. According to the department, the appellant has been offering services under the category of "Manpower Recruitment and Supply Agency Service." It was also noted that by offering this service, the appellant has not satisfied their service tax obligation on the money received from M/s. GMDC. Accordingly, a show cause notice dated 12.07.2012 was issued to the appellant demanding service tax of Rs. 1,65,31,586/- under the category of Manpower Recruitment and Supply Agency Service. The matter got adjudicated by the adjudicating authority and confirmed all the charges as raised in the show cause notice. The appellant filed an appeal, challenging the levy of service tax primarily under the category of Manpower Recruitment and Supply Agency Service. Amber Kumarwat, Counsel for the appellant, argued that activities falling under the category of manpower recruitment or supply agency services only include those involving contracts for the temporary or permanent supply of labor. In this particular case, the appellant had signed a contract to carry out certain tasks, including managing, operating, and maintaining a calcination plant, rather than hiring labor in any way. The counsel for the appellant also argued that the appellant's provision of services, including the transportation of raw bauxite and the upkeep and operation of a bauxite calcination plant, does not qualify for taxation under the heading of supply agency or manpower recruitment. Moreover, the counsel for the appellant pointed out the provisions of Rule 2(g) of Service Tax Rules, 1994, which defines the supply of manpower as "supply of manpower temporarily or otherwise, to another person to work under his superintendence or control." Therefore, the counsel for the appellant concluded that if an action falls under the category of manpower supply, the person receiving the workforce should have control over it. In this instance, however, the show cause notice itself claimed that the appellant was in charge of and supervising the workers sent to the GMDC factory. Tara Prakash, Deputy Commissioner for the respondent, supported the findings given in the order-in-original. After analyzing the contentions of both parties, the CESTAT bench observed: - That the manpower working at the factory premises of M/s. GMDC was under the control and supervision of the appellant in this case. - The payment of work assigned to them, as per the above-mentioned work order, was based on calcinated bauxite produced by the appellant in MTs, and an amount of Rs. 1931/- was paid per MT to the appellant. The two-member bench of Ramesh Nair, Member (Judicial), and C.L. Mahar, Member (Technical), held that the service provided by the appellant to M/s. GMDC does not fall under the category of Manpower Recruitment or Supply Agency Service. Therefore, the bench allowed the appeal filed by the appellant Meena Agency Limited. Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates

Service for transportation of raw bauxite as well as operation and maintenance of bauxite calcination plant not taxable under category of “Manpower Recruitment or Supply Agency Service”: CESTAT [Read Order]

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Service for transportation of raw bauxite as well as operation and maintenance of bauxite calcination plant not taxable under category of “Manpower Recruitment or Supply Agency Service”: CESTAT [Read Order]

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