By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
fiogf49gjkf0d
Activity of harvesting and transporting sugarcane does not amount to provision of supply of manpower services. Demand cannot be confirmed on the basis of wrong understanding of the Appellants or any other person i.e. merely because the Appellants had agreed that the activity to be classified as supply of manpower services in the statement recorded, the same cannot be taken as a base to confirm service tax demand.
Facts: The farmers had contracted with the sugar factory for the sale of sugarcane. The Appellant entered into an agreement for cutting/harvesting sugarcane and transporting the same from field to factory. There was an arrangement with truck owners and their labourers to harvest sugarcane and transport it to the factory who agreed to pay charges on the basis of tonnage of sugarcane supplied. It paid commission to contractors as a percentage of harvesting and transportation charges. All the payments were first received by the Appellant and distributed to the contractors who in turn were paid supervision charges to undertake the transactions. Department classified the services as supply of manpower services. It was claimed that only payment was routed through them and there was no element of provision of supply of manpower services. Even if the services of labourers were to be taxed, the same may be classified as business auxiliary services. In absence of issuance of Show Cause Notice and issuance of order under business auxiliary services, the Show Cause Notice and Order are bad in Law.
The revenue, on the other hand, contended that the employees representing the Appellant agreed that the activities amounted to supply of manpower vide the statements recorded by the Adjudicating Authority.
Held:
After analysing the agreements, it was observed that the agreement was for cutting and transporting sugarcane and there was no provision of supply of manpower services. Relying on the decision of the Mumbai Tribunal in case of Amrit Sanjivni Sugarcane Transport Co. Pvt. Ltd. vide Order No. A/532/2013/CSTB/C-1 dated 02-04- 2013
02-04- 2013, it was held that the services were in the nature of business auxiliary services. Merely because in the statements, the classification of services was agreed as supply of manpower services, the same cannot be taken as a valid ground for demand of service tax. Demand should be made in accordance with the law, taking into account the nature of contract. In no case, demand should be confirmed on the basis of wrong understanding of the Appellant or any other person. Accordingly, the appeal was allowed and the department was directed to refund the amount of pre-deposit.
