Commissioner Of Central Excise vs Sanjay Natha Tupe
- CitationAPPEAL No.ST/449/10
Ratio decidendi
The rule this decision rests on
The question is whether a lumpsum payment received for hamali (lifting and storing sugar bags) under a package arrangement with a sugar factory attracts service tax under the Manpower Recruitment or Supply Agency category, where the service provider engages workers itself and is paid for the work as a whole rather than per worker. Where the consideration is a lumpsum for the completion of a work as a package, and the payment is not made in respect of individual workers supplied, the activity is not to be treated as a manpower recruitment or supply service merely because the service provider engages and pays the labour that performs it; the nature of the service is determined by reading the contractual arrangement as a whole, and neither its nomenclature nor the particular activities undertaken under it is decisive. A service that was not made taxable under the statute in force during the relevant period cannot be subjected to service tax on the strength of later amendments extending the taxable net; the liability is determined by the law as it stood at the relevant time.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI
COURT No. I
APPEAL No.ST/449/10
(Arising out of Order-in-Appeal No.AGS/(102)/62/2010 dated 21/06/2010 passed by Commissioner of Central Excise & Customs (Appeals), Aurangabad)
For approval and signature:
Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical)
1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy :Seen of the Order?
4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================
Commissioner of Central Excise, Mumbai Appellant Vs. Sanjay Natha Tupe Respondent
Appearance:
Shri.A.B.Kulgod, Asst. Comm. (AR) for appellant None for respondent
CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical)
Date of Hearing : 09/07/2015 Date of Decision : 09/07/2015
ORDER NO
Per: M.V. Ravindran
1. This appeal is filed by the Revenue against Order-in-Appeal No.AGS/(102)/62/2010 dated 21/06/2010 passed by Commissioner of Central Excise & Customs (Appeals), Aurangabad.
2. None appeared on behalf of the respondent. On perusal of the records, we find that the issue lies in a narrow compass; accordingly, the appeal is taken up for disposal in the absence of any representation from the respondent.
3. Learned DR submits that the issue involved in this case is regarding the service tax liability for the period 16/05/2005 to 31/03/2009 under the category of Manpower Recruitment or Supply Agency service. It is his submission that the respondent is engaged in work-wise carrying out lifting and storing of sugar bags. For such assignment he is receiving payment from the sugar factory and paying wages to the workers/labourers/employees by him; hence, liable to discharge service tax liability.
4. We find that the first appellate authority in the impugned order has categorically recorded that the respondent had received an amount towards Hamali charges as a lumpsum value and not for the individual worker wise, who are employed for undertaking the work of lifting and storing of sugar bags in the sugar factory. The entire tenor of the order seems to be that the activity undertaken by the appellant is one of the lumpsum activity. We find that theissue involved in this case is now squarely covered by the judgement of the Honble High Court in the case of CCE & ST Vs. Gadavari Khore Cane Transport Company Pvt. Ltd., - 2015-TIOL-253-C-MUM-ST. We with great respect reproduce the relevant paragraph No.6 & 7:
We are not inclined to accept this submission because, as said above, the services provided by the respondent, though for harvesting, loading, unloading, etc., it was essentially a package deal through which the sugar factory would get their essential raw material supplied to their factory site. In what manner the work is done was known to the sugar factory but was not their concern really. The sugar factory was aware that this work is done with the help of number of labours , whose services are procured by the respondent either individually or through some other agencies but how was such work done was not the concern of the sugar factory. Harvesting sugarcane, at-least today, is a labour intensive activity. Very soon, this work would be done mechanically. So, the 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 . This interpretation of the agreement between the respondent and its principal is in tune with the Judgment of the Supreme Court in the case of Super Poly Fabriks Ltd. Vs. Commissioner of C. Ex., Punjab, reported in 2008 (10) S.T.R . 545 (S.C.) = 2008- TIOL -82-SC-ST . Paragraph No. 8 of the said judgment can be relied upon to drag the point home, which reads as under :-
"8. There cannot be any doubt whatsoever that a document has to be read as a whole. The purport and object with which the parties thereto entered into a contract ought to be ascertained only from the terms and conditions thereof. Neither the nomenclature of the document nor any particular activity undertaken by the parties to the contract would be decisive."
7. In any case, the agreement itself is eloquent enough to draw the above conclusion. In this background, we must look at the show cause notice dated 16.10.2008. On that date, whether the Revenue was in a position to levy tax on services provided by the respondent? The answer has to be in negative. Having regard to the history of service tax in our country, it becomes clear that when the State was in the process of including various types of services in service tax net, the State's policy was to include different services at different point of time. For the first time in 1997, the State included Recruitment Service as taxable service. Slowly, labour contract services were also made taxable in the year 2005. The package deal which is involved in this case was not subjected to service tax in the year 2005 and so, the Revenue was really not able to demand service tax to the respondent. The provisions of Finance Act did not give them sufficient leeway. So the notice and demand was uncalled for. After the notice was issued and the demand was made, it became a difficult endeavour for the Revenue to bring the service provided by the respondent within the definition of Manpower Recruitment and Supply Agency. In our view, it was not possible for them to do so then. Since then much water has flown and now sufficient amendments are made in the relevant provisions. We are told that now all services, except the services mentioned in the "negative list" are made taxable. Until this provision is made i.e. July 2012, the situation was different for the Revenue and apparently, the services rendered by the respondent at the relevant time were found not taxable.
5. It can be seen from the above reproduced paragraphs that the issue involved is now squarely covered by the judgement of the Honble High Court; accordingly, we hold that the impugned order is correct and legal does not suffer from any infirmity.
6. Appeal is allowed.
(Dictated in Court)
(Raju) Member (Technical) (M.V. Ravindran) Member (Judicial)
pj
1 4
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free