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ST – Assessee had engaged workers for cleaning work and paid them wages on day to day basis – no ground to classify such services as ‘manpower supply’ to Nagar Nigam, Lucknow: CESTAT

2019-TIOL-2306-CESTAT-ALL

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH, ALLAHABAD
COURT NO. I

CROSS Application No. ST/CROSS/70052/2015 in
Appeal No. ST/52960/2015-CU[DB]

Arising out of Order-in-Appeal No. 135-CE/APPL-LKO/LKO/2015, Dated: 09.04.2015
Passed by Commissioner, Customs, Central Excise and Service TAx (Appeals), Lucknow

Date of Hearing: 06.12.2018
Date of Decision: 10.01.2019

COMMISSIONER OF CENTRAL EXCISE
LUCKNOW

Vs

M/s LION SECURITY GUARDS SERVICES

Appellant Rep by: Shri Mohd Altaf, Assistant Commissioner AR
Respondent Rep by: Absent

CORAM: Archana Wadhwa, Member (J)
Anil G Shakkarwar, Member (T)

ST – The assessee is registered with Service Tax Department for providing services under “Security Services” on which service tax liability was being discharged by them – Revenue found that they have entered into agreement with M/s Nagar Nigam Lucknow for executing the cleaning work and are employing a number of persons for the same – By entertaining a view that the activity of assessee would amount to providing services under category of Manpower Supply to M/s Nagar Nigam Lucknow, they initiated proceedings against them by way of issuance of SCN raising demand of duty by invoking longer period of limitation – The assessee had also filed an affidavit on record declaring that to execute the said work, they engaged the workers from outside and paid them wages on day to day basis – No permanent workers were engaged by them to execute the said work – As such Commissioner (A) concluded that the workers deployed by assessee for completion of contract work were not contractual workers employed by them – As such by relying upon the Tribunal’s decision in case of Samarth Sevabhavi Trust – 2013-TIOL-1129-CESTAT-MUM, he held in favour of assessee – As against the findings of Commissioner (A), Revenue has not advanced any evidence to reflect upon the fact that the assessee was actually supplying the Manpower to Nagar Nigam – The various contracts and agreements entered by assessee with Nagar Nigam clearly show that the work required to be done by them was the lump-sum work of cleaning for which purpose they were being paid – The workers deployed by them are clearly working on behalf of the assessee himself and they are not under the supervision or control of the service recipient – The Tribunal’s decisions in case of Divya Enterprises and Ritesh Enterprises have considered the identical situations and have held that in the absence of any agreement to utilize the services of an individual, assessee cannot be said to have provided Manpower Recruitment or Supply Agency Services – No individual were being supplied by assessee, who were only doing the cleaning job, no merits found in the Revenue’s appeal, same is accordingly rejected: CESTAT

Appeal rejected

Case laws cited:

Samarth Sevabhavi Trust vs. CCE, Aurangabad – 2013-TIOL-1129-CESTAT-MUM… Para 7

Divya Enterprises vs. CCE 2019 (19) S.T.R. 370 (Tri.-Bang.)… Para 7

Ritesh Enterprises vs. CCE Bangalore 2010 (18) S.T.R. (Tri.-Bang.)… Para 7

FINAL ORDER NO. 70046/2019

Per: Archana Wadhwa:

Being aggrieved with the order passed by Commissioner (Appeals) Revenue has filed the present appeal. We have heard learned AR Shri Mohd Altaf, Assistant Commissioner appearing for the Revenue. Nobody appeared for the respondent.

2. As per the facts on record, the assessee is registered with the Service Tax Department for providing services under the “Security Services” on which service tax liability was being discharged by them.

3. As a result of investigations conducted against the assessee, Revenue found that they have entered into agreement with M/s Nagar Nigam Lucknow for executing the cleaning work and are employing a number of persons for the same. By entertaining a view that the activity of the respondent would amount to providing services under the category of Manpower Supply to M/s Nagar Nigam Lucknow, they initiated proceedings against them by way of issuance of a show cause notice dated 21.10.2011 raising demand of duty of Rs.44,40,831/- for the period from 2005-06 to 2009-10 by invoking the longer period of limitation. The show cause notice culminated into an order passed by the Original Adjudicating Authority.

4. On appeal against said order the Appellate Authority set aside the same and allowed the assessee’s appeal. Hence, present appeal by Revenue.

5. Commissioner (Appeals) for holding in favour of the assessee referred to the definition of ‘Manpower Recruitment or Supply Agency’ under Section 65(105) of the Finance Act as also to the definition of the Taxable Services. He also examined the agreements entered into between the assessee and M/s Nagar Nigam as also the Bills raised by them clearly establishing that the work required to be done by the assessee was the cleaning job as per the cleaning plan prepared by them and approved by the proper Officer of the Nagar Nigam, through the workers/sweepers engaged by the assessee with equipments as required by Nagar Nigam. Further he observed that in terms of the said agreements, all the responsibilities to get the work done from workers/sweepers is on the contractor i.e., assessee failing which they shall be penalized by way of deduction of amount from the bills submitted by them.

The Appellate Authority also took into consideration the certificate issued by the Nagar Nigam certifying that the entire work is being executed in the Nagar Nigam, through contractors with required labour/workmen by them under the agreement, who are responsible to get all the work executed through workmen/labour properly under their supervision. The Nagar Nigam only inspect the work of the contractors. This practice is being in vogue since long.

He also examined the unit wise bills raised by the assessee indicating that the same were raised for cleaning of ward/unit executed by the worker/labours under the supervision/direction of the assessee. Accordingly, he held that the entire essence of the contract was execution of work as understood by the assessee and the recipient of the asseessee’s services.

6. Commissioner (Appeals) also referred to Para 22.3 of MF (DR) Circular No. B1/6/2005-TRU dated 27.07.2005, which is as under:-

“22.3. In these cases, the individuals are generally contractually employed by the manpower supplier. The supplier agrees for use of the services of an individual employed by him to another person for a consideration. The terms of the individual’s employment may be laid down in a formal contract or letter of appointment or on a less formal basis. What is relevant is that the staff are not contractually employed by the recipient but come under his direction. “

7. The respondent had also filed an affidavit on record declaring that to execute the said work, they engaged the workers from outside and paid them wages on day to day basis. No permanent workers were engaged by them to execute the said work. As such the Commissioner (Appeals) concluded that the workers deployed by the assessee for completion of contract work were not contractual workers employed by them. As such by relying upon the Tribunal’s decision in the case of Samarth Sevabhavi Trust vs. CCE, Aurangabad reported at 2014 (36) S.T.R. 83 (Tri. – Mumbai) = 2013-TIOL-1129-CESTAT-MUM, he held in favour of the assessee. He also referred to various other decisions like Divya Enterprises vs. CCE reported at 2019 (19) S.T.R. 370 (Tri.-Bang.) and Ritesh Enterprises vs. CCE Bangalore reported at 2010 (18) S.T.R. (Tri.-Bang.).

8. As against the above findings of Commissioner (Appeals), Revenue has not advanced any evidence to reflect upon the fact that the assessee was actually supplying the Manpower to Nagar Nigam. The various contracts and agreements entered by the respondents with Nagar Nigam clearly show that the work required to be done by them was the lump-sum work of cleaning for which purpose they were being paid. The workers deployed by them are clearly working on behalf of the assessee himself and they are not under the supervision or control of the service recipient. The Tribunal’s decisions in the case of Divya Enterprises and Ritesh Enterprises have considered the identical situations and have held that in the absence of any agreement to utilize the services of an individual, assessee cannot be said to have provided Manpower Recruitment or Supply Agency Services.

9. Inasmuch as the issue stands decided by above referred decisions and examination of the agreements lead us to hold that no individual were being supplied by the respondent, who were only doing the cleaning job, we find no merits in the Revenue’s appeal. The same is accordingly rejected. CO also disposed of.

(Pronounced in Court on 10.01.2019)

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