Talala Taluka Sahakari Khand Udyog Mandali Limited Vs Commissioner of Central Excise (CESTAT Ahmedabad)
CESTAT Ahmedabad held that expenses charged to the farmers towards harvesting and transportation of sugarcane is not chargeable to service tax under Manpower Recruitment and Supply Agency Services.
Facts-
The appellant has arrangement with the farmers for harvesting and transportation of sugarcane to sugar mills. The appellants while paying the cost of sugarcane to the farmers they deduct the expenses of harvesting and transportation of sugarcane. The case of the department is that such expenses charged to the farmers is liable to service tax under the category of ‘Manpower Recruitment and Supply Agency Services’, accordingly the service tax demand was confirmed. Being aggrieved, the appellant filed the present appeals.
Conclusion-
We also take note of the submission made by Shri K.J. Kinariwala, learned Consultant that for the subsequent period learned Commissioner (Appeals) in the case of M/s. Talala Taluka Sahakari Khand Udyog Mandali Limited dropped the demand vide order No. BHV-EXCUS-000-APP-011-15-16 dated 29.05.2015. Considering the various decisions referred above including judgment of Hon’ble Bombay High Court, the issue is no more res-integra and the demand under Manpower Recruitment and Supply Agency Services is not sustainable. Accordingly, the impugned orders are set-aside and appeals are allowed with consequential relief.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The common facts in brief in respect of all the appeals are that the appellant have arrangement with the farmers for harvesting and transportation of sugarcane to sugar mills. The appellants while paying the cost of sugarcane to the farmers they deduct the expenses of harvesting and transportation of sugarcane. The case of the department is that such expenses charged to the farmers is liable to service tax under the category of ‘Manpower Recruitment and Supply Agency Services’, accordingly the service tax demand was confirmed. Being aggrieved, the appellant filed the present appeals.
2. Shri K.J. Kinariwala, learned Consultant appearing on behalf of the appellant M/s. Talala Taluka Sahakari Khand Udyog Mandali Limited, submits that there is no arrangement for supply of manpower for harvesting and transportation whereas the contract was for harvesting and transportation of sugarcane and the charges for such activities is per ton basis. The farmers are not concerned with number of manpower, man-days, or man-hours for making payment and the charges are made per-ton of sugarcane basis. Therefore, there is no supply of man power. He placed reliance of the following judgments:-
(a) 2014 (36) STR 123 (Tri. Mumbai) – Satara Sahakari Shetu Audyogik Oos Todani Vahtook Society vs. CCE, Kolhapur.
(b) 2016 (41) STR 806 (Bom) – CC, C.Ex & ST, Aurangabad vs. Shri Samarth Sevabhavi Trust.
(c) 2013 (31) STR 611 (Tri. Mumbai) – Seven Hills Construction vs. CST, Nagpur.
(d) 2010 (18) STR 17 (Tri. Bang.) – Ritesh Enterprises vs. CCE, Bangalore.
He further submits that in the appellant’s own case, for the subsequent period, the learned Commissioner (Appeals) has dropped the proceedings vide order No. BHV-EXCUS-000-APP-011-15-16 dated 29.05.2015, therefore the issue is no longer under dispute.
3. In the matter of appeal of M/s. Bileshwar Khand Udhyog and others, Shri Amal Dave, learned Counsel appeared and submitted written submission. He also submits that there is no arrangement of manpower as charges for harvesting and transportation is on per ton of sugarcane basis. He placed reliance on the following judgments:-
(a) 2016 (41) STR 806 (Bom.) – CCE&ST, Aurangabad vs. Samarth Sevabhavi Trust
(b) 2014 (36) STR 83 (Tri.-Mumbai) – Samarth Sevabhavi Trust vs. CCE&ST, Aurangabad.
(c) 2014 (34) STR 410 (Tri.-Mumbai) – Bhogavati Janseva Trust vs. CCE, Kolhapur
(d) 2015 (39) STR 75 (Tri.-Mumbai) – CCE, Kolhapur vs. Shriram Sao TVS Limited.
(e) 2016 (44) STR J210 (Bom.) – Commissioner vs. Rajarambapu Shetkari & Shetmajur Sahya Samiti
4. Shri Vijay G Iyengar, learned Superintendent (AR) appearing for the Revenue in the matter of Appeal No. ST/10372/2013-DB and Shri Kalpesh P Shah, learned Superintendent (AR) appearing for all the other appeals reiterated the findings of the impugned orders.
5. We have carefully considered the submissions made by both the sides and perused the record. We find that the fact is not in dispute that the appellants have no arrangement for supply of manpower for harvesting and transportation of sugarcane for supply to sugar mills. It is also the fact that charges were calculated on per ton basis therefore, the number of manpower, man-days or man-hours is not relevant for carrying out the activities of harvesting, transportation etc. The arrangement is job specific and not the manpower specific. In the identical issue, this Tribunal has taken consistent view in the following judgments:-
(a) Satara Sahakari Shetu Audyogik Oos Todani Vahtook Society vs. CCE, Kolhapur
5.1 We have also perused the contracts entered into by the appellant-assessees with the sugar factory. A typical contract reads as follows :-
“For the sugar season 2005-06 Karkhana and Sanstha has agreed that –
1. Sanstha will carry out the job of cutting and transportation of sugar-cane of the cane grower members as well as non-members of the Karkhana.
2. Karkhana will pay to the Sanstha the charges of cane cutting and transportation on fortnightly basis.
3. The rates for sugarcane cutting and transportation are decided by the State Govt. and the Karkhana will pay the charges (worked out on the basis of the said rates) to the Sanstha on fortnightly basis.
4. The commission/incentive payable to the contractors will be handed over by Karkhana to the Sanstha which further has to be paid by Sanstha.
5. Karkhana will not be responsible for the injury if any, caused to any cane cutting labourer while doing the cane cutting.
6. For arranging the cane cutting and transportation, the Karkhana will pay the consideration to the Sanstha as and when demanded by the Sanstha.
7. The Sanstha also will carry out the jobs of handling of sugar, feeding of sugarcane in the sugar mill, cleaning of parking yard of vehicles transporting sugarcane, loading/unloading/handling of pressmud, baling of bagasse, handling of loose bagasse, collecting/removing/disposal of boiler ash, supply of wood for burning into the boiler, handling/stacking of compost, disposal of spentwash by spraying on the pressmud, stitching of sugar bags. The rates for the said job will be decided by the Karkhana and Sanstha.
8. The karkhana will retain 15% amount of every bill raised for cane cutting transportation job as well as other jobs as security deposit and will handover to the Sanstha after satisfactory completion of the jobs by the Sanstha.
9. Since Co-operative societies are exempted from stamp duty, the agreement is not done on stamp paper.
Sd/- Sd/-
Manager, Sanstha Managing Director, Karkhana”
The rates fixed for Sugar Season 2005-06 are as follows:-
“1. Cutting and transportation of sugarcane-
