Commissioner Of Central Excise vs Shriram S.A.O.T.V.S. Ltd

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. I

Appln.No.ST/CO/41/10 APPEAL No.ST/391/10

(Arising out of Order-in-Appeal No.P-II/PAP/67/2010 dated 21/04/2010 passed by Commissioner of Central Excise (Appeals), Pune)

For approval and signature:

Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. P.R. Chandrasekharan, 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, Appellant Kolhapur Vs Shriram S.A.O.T.V.S. Ltd., Respondent

Shriram S.A.O.T.V.S. Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Kolhapur

Appearance:

Shri.S.V.Nair, Supdt. (AR) for appellant Shri.D.R.Gadekar, Consultant for respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.R.Chandrasekharan, Member (Technical) Date of Hearing : 13/03/2015 Date of Decision : 13/03/2015

ORDER NO

Per: M.V. Ravindran

1. This appeal is filed by the Revenue against Order-in-Appeal No.P-II/PAP/67/2010 dated 21/04/2010 passed by Commissioner of Central Excise (Appeals), Pune.

2. Heard both the sides and perused the records.

3. The issue involved in this case 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 the respondent who is registered under co-operative society; service tax liability gets confirmed 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. Coming to such a conclusion, show-cause notices were issued to the respondent and the adjudicating authority confirmed the demands on the respondent. Aggrieved of the such order an appeal was preferred before the first appellate authority. The first appellate authority after following the due process of law came to a conclusion that the services rendered by the appellant would fall under the category of manpower supply agency service and hence set aside the order-in-original.

4. We find that the issue is no more res integra inasmuch as this bench has held in the case of Bhogavati Janseva Trust Vs. CCE, Kolhapur  2014 (34) STR 410 (Tri-Mum) on an identical issue has held in favour of the assessee. The same view was expressed by the bench in Satara Sahakari Shetu Audyogik Oos Todani Vahtook Society Vs. CCE, Kolhapur  2014 (36) STR 123 (Tri-Mum). It was brought to our notice that identical view was expressed by the bench in the case of Godavari Khore Cane Transport Company Pvt. Ltd. The judgement of the Godavari Khore Cane Transport Company Pvt. Ltd. was taken in appeal by the Revenue before the Honble High Court of Bombay at Aurangabad. Their Lordships has upheld the order of the Tribunal reported as in 2015-TIOL-253-HC-MUM-ST. The ratio of the judgement of the Honble High Court at para 6 & 7; we with utmost respect reproduce the same.

6. 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 in2008 (10) S.T.R. 545 (S.C.). 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. In view of the judicial pronouncements on the same issue, we do not find any merits in the appeal filed by the Revenue. The appeal filed by the Revenue is rejected.

6. The cross objection filed by the appellant is also disposed of.

(Dictated in Court)

(P.R. Chandrasekharan) Member (Technical) (M.V. Ravindran) Member (Judicial)

pj

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