By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Undertaking job work contract in principal manufacturer’s premises would not constitute providing services of manpower supply and recruitment services.
Facts
Respondent was awarded a contract of carrying out job of cutting, drilling, punching, bending and notching of material on job work basis in the factory premises of manufacturer for galvanised material from production line, for which lump sum amount was paid to respondent. Department demanded service tax from respondent under the category of “Manpower Supply Recruitment Services”.
Held
The Tribunal referred to its own final order given in case of M/s. Yogesh Fabricators on identical issue wherein it was held that service tax cannot be demanded on the amount on which excise duty has been paid. The assessee had undertaken a job, consideration for which is paid on the basis of lump sum amount. Once the activity of appellants is over, the principal manufacturer entered the production in its Daily Stock Register (RG-1) and cleared the goods at appropriate rate of duty. The entire job is carried out within the factory premises before RG-1 stage. Thus, the activity undertaken by the assessee was production line of principal manufacturer. In view of Notification No. 8/2005-ST dated 01-03-2005, activity would not attract service tax.
The Tribunal also referred to the decision in the case of Ritesh Enterprises vs. Commr. of C.Ex, Bangalore ‘ 2010 (18) S.T.R. 17 (Tri.-Bang.) where after going through contracts between the parties, the Tribunal held that the tenor of agreement between the parties has to be understood and interpreted in its entirety and when the contract was given for execution of job work and there is no whisper of supply of manpower, such contract cannot be said to be for supplying manpower.
