Friday, August 16, 2013

Work carried out on lump sum basis as a contractor doesn't mean rendition of 'Manpower Supply Services'

Work carried out on lump sum basis as a contractor, does not, prima facie, amount to Manpower Supply Services and is not chargeable to service tax under that service

In the instant case the assessee, a sugar co-operative society of farmers, was buying sugarcane grown by farmers. It had appointed labour for cutting of sugarcane crops, then loading of same into the trailer, unloading and for putting them into its sugar factory. The assessee was paying price for purchase of sugarcane after deducting Rs. 300 per MT for work done by it .Department viewed  that Rs. 300 per MT was sum towards manpower supply services provided by the assessee to farmers and demanded service tax thereon.

The Tribunal held as under:

1) Invoices raised by assessee showed that assessee was charging lump sum amount of Rs. 300/- per metric tonne for help provided by it for cutting, loading and unloading of sugarcane from fields of farmers;

2) In view of decision in K. Damodarareddy v. CCE [2010] 25 STT 69 (Bang.-Cestat) and in Ritesh Enterprises v. CCE [2010] 24 STT 283 (Bang-Cestat), prima facie, such work carried out on lump sum basis could not be categorized as 'manpower supply services' - Shri Bileshwar Khand Udyog Sahakari Mandali Ltd. v. Commissioner of Central Excise [2013] 36 8 (Ahmedabad - CESTAT)