Appellant, a labour contractor — Conversion process of tin plate to containers in the premises of M/s. NKPL — Tax levied on the appellant — The appellant was providing manpower recruitment or supply agency services — On the basis of facts it was held that there was no service tax liability.

Appellant, a labour contractor — Conversion pro-cess of tin plate to containers in the premises of M/s. NKPL — Tax levied on the appellant — The appellant was providing manpower recruitment or supply agency services — On the basis of facts it was held that there was no service tax liability.

The appellant was a labour contractor and was doing conversion of tin plate to containers to pet jars in the factory premises of M/s. NK Proteins Ltd. (NKPL). The machinery, space and all other facilities were provided by NKPL. The appellant was required to take the required labour to the factory of NKPL to undertake the conversion depending upon the requirement of NKPL. According to the agreement, the appellant was to pay specific amount determined on the basis of number of containers produced by the appellant. Proceedings were initiated against the appellant on the ground that the activity undertaken amounted to providing manpower recruitment or supply agency.

Held:

To determine whether the service is taxable under manpower recruitment or supply agency, first of all it should be provided by manpower recruitment or supply agency and secondly it should be in relation to manpower supply or recruitment. The appellant was doing only contract manufacturing work and there was no question of any labour supply or manpower supply or manpower recruitment agency. Nowhere in the agreement there was any mention with regards to manpower supply or recruitment and the agreement specifically talks about the products to be manufactured and payments to be made. The appellant was also registered with the labour department as a contract manufacturer and not as a labour supply or manpower supply or manpower recruitment agency. The Department totally failed to show in which manner the service provided by the appellant could be categorised under manpower supply or recruitment. Hence it was held that the appellant was not liable to service tax.