The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the maintenance of fire fighting equipment does not fall under ‘manpower recruitment or supply agency service’.
The bench of Somesh Arora (Judicial Member) and C.L. Mahar (Technical Member) has observed that most of the work orders as well as invoices are for maintenance and fire fighting service as claimed by the appellant. It is also relevant to consider the definition given in the Finance Act for Manpower Recruitment or Supply Agency Service which provides that for service under the category of Manpower Recruitment or Supply Agency Service ‘any person engaged in providing any service directly or indirectly in any manner for recruitment or supply of manpower, temporarily or otherwise to any other person’. There is no contract for providing manpower and the same is for specific purposes for fire fighting and to handle any emergent situation as well as for maintenance and keeping the fire fighting equipment in good condition.
The appellant/assessee is engaged in assisting fire safety service to handle any emergency arising at the client’s premises and to maintain fire and safety equipment in working condition. The department during the course of audit and scrutiny of the financial records of the appellant entertained a view that the appellant is providing Manpower Recruitment or Supply Agency Service and have not paid the service tax.
A show cause notice came to be issued asking to pay service tax. Interest and penal provisions of the Finance Act, 1994 have also been invoked. The matter got adjudicated by the order under which all the charges as invoked in the show cause notice have been confirmed against the appellant by the Adjudicating Authority.
The appellant approached the Commissioner (Appeals) for relief however, the appellant did not succeed at the appeal level also and the appeal was dismissed by the Commissioner (Appeals).
The assessee contended that the appellant has taken contract for assisting various industrial units in maintaining of fire fighting maintenance and detection service including the maintenance and upkeep of fire fighting equipment installed at the various factory premises.
The appellant submitted that payment which is being made to the appellant is on a monthly lump-sum basis by individual industrial units. So far statutory obligations under the law like Provident Fund and ECI etc. with regard to employees deployed by the appellant at various industrial units for the purpose of assisting their clients in maintenance of the fire fighting system were discharged by the appellant. The appellant is also making compliance of all the statutory provisions and other regulations with regard to employees deployed by him at various factory premises.
The assessee argued that annual contract is for assistance and fire safety service to handle any emergency in the plant of their clients and residential township of M/s. Chambal Fertilisers and Chemicals Limited for which they are paid a lump sum amount of Rs. 1,63,000/- per month. The personnel deployed by the appellant have always remained at their own pay-roll and worked under their personal control and supervision. The company, where the fire fighting personnel are deployed does not exercise any control over the persons engaged by the appellant and therefore, it is wrong on the part of the department to allege that the appellant has supplied manpower to various companies. They have taken a specific work of fire detection and for handling and to upkeep fire safety equipment on an annual contract basis, therefore, it does not fall under the category of Manpower Recruitment or Supply Agency Service as provided under Section 65 (68) of the Finance Act, 1994.
The assessee contended that when a specific job is undertaken on lump-sum payment on monthly/annual basis, it cannot be classified as service under the category of Manpower Recruitment or Supply Agency Service.
The tribunal while allowing the appeal held that the appellant had not provided service of manpower but had acted as a job worker in absence of finding that no manufacture activity was carried out.
Case Title: Industrial Fire And Safety Services Versus Commissioner of Central Excise & ST
Case No.: Service Tax Appeal No. 10173 of 2016-DB
Date: 10.09.2024
Counsel For Appellant: Mrugesh G. Pandya
Counsel For Respondent: AR Kanani
