Parwindra Enterprises Vs Commissioner of Service Tax (CESTAT Chandigarh)
The appeal challenged the Order-in-Appeal dated 23.12.2013 by which the Commissioner (Appeals) confirmed a service tax demand of Rs. 81,282, along with interest, an equal penalty under Section 78 of the Finance Act, and a penalty of Rs. 5,000 under Section 77.
The appellant had entered into a contract dated 31.05.2006 with M/s Markfed Agro Chemicals for supplying labour on a daily basis and for loading and unloading of trucks/LCVs for the period 01.06.2006 to 31.05.2007. A show cause notice dated 20.04.2011 sought recovery of Rs. 2,72,932 in service tax for the period 01.07.2006 to 30.11.2007, alleging that the appellant had provided Manpower Recruitment Agency Services. After adjudication, the Assistant Commissioner, by Order-in-Original dated 31.12.2012, confirmed service tax of Rs. 2,14,687, together with interest and penalties under Sections 77 and 78 of the Finance Act, 1994. On appeal, the Commissioner (Appeals) partly allowed the appeal but sustained a demand of Rs. 81,282 with interest and penalties, leading to the present appeal before the Tribunal.
As the appellant expressed inability to engage legal representation owing to financial hardship, the Bench requested Ms. Krati Singh, Advocate, to act as amicus curiae, which she accepted.
The appellant submitted that the impugned order was unsustainable because it travelled beyond both the show cause notice and the Order-in-Original. It was contended that the Commissioner (Appeals) recorded a finding that the appellant had collected service tax from Markfed for supplying labour and loading and unloading services, although neither the show cause notice nor the Order-in-Original contained any such allegation. According to the appellant, the finding invoking Section 73A of the Finance Act was therefore beyond the scope of the proceedings.
The appellant further argued that the activities performed did not fall within the definition of “manpower recruitment or supply agency” under Section 65(68) of the Finance Act, 1994, which defines the expression as any person engaged in providing services for recruitment or supply of manpower, temporarily or otherwise, to another person.
The appellant also submitted that the entire demand was barred by limitation because the show cause notice dated 20.04.2011 covered the period 10.07.2006 to 30.11.2007. It was contended that the Revenue had failed to establish any of the circumstances specified in Section 73(1) for invoking the extended period of limitation, namely fraud, collusion, wilful misstatement, suppression of facts, or contravention of statutory provisions with intent to evade payment of service tax.
The Revenue relied upon the findings contained in the impugned order.
After considering the submissions and examining the record, the Tribunal found that the appellant was merely supplying labour on a daily basis for loading and unloading operations for Markfed. The Tribunal held that such activity did not fall within the definition of manpower recruitment or supply agency under Section 65(68) of the Finance Act, 1994. Consequently, the appellant was held not liable to pay service tax on the charges received for those activities.
The Tribunal also found that the impugned order travelled beyond the scope of both the show cause notice and the Order-in-Original. It observed that neither document alleged that the appellant had collected service tax from Markfed and failed to deposit it with the Government under Section 73A of the Act. Accordingly, the Tribunal held that the Commissioner (Appeals)’ finding under Section 73A was unsustainable because it was beyond the allegations contained in the show cause notice and the adjudication order. The Tribunal further reiterated that the services relating to loading and unloading of trucks/LCVs were not covered within manpower recruitment or supply agency under Section 65(68).
Holding that the impugned order was not sustainable in law, the Tribunal set aside the order and allowed the appeal, granting consequential relief, if any, in accordance with law.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
The present appeal is directed against the impugned order dated 23.12.2013 passed by the Commissioner (Appeals), whereby the Ld. Commissioner (Appeals) has confirmed the demand of service tax of Rs. 81,282/- along with equal penalty under Section 78 of the Finance Act and also fine of Rs. 5000 under Section 77.
2. Briefly the facts of the present case are that the appellant entered into a contract on 31.05.2006 with M/s Markfed Agro Chemicals for supplying labour on daily basis and loading & unloading of Taucks/LCV for the period 01.06.2006 to 31.05.2007. The appellant was issued a show cause notice dated 20.04.2011 for recovery of service tax amounting to Rs. 2,72,932/- by the Deputy Commissioner, Ropar for the period 01.07.2006 to 30.11.2007 for providing Manpower Recruitment Agency Services. The appellant filed the reply to the show cause notice and after following the due process, the Asstt. Commissioner vide his Order-in-Original dated 31.12.2012 confirmed the services tax amounting to Rs. 2,14,687/-along with interest and also imposed penalty under Section 77 & 78 of the Finance Act, 1994. Aggrieved by the said order, the appellant filed the appeal before the Commissioner (Appeals) vide his Order-in-Appeal partially accepted the appeal by confirming the demand of Rs. 81,282/- along with interest and penalty. Hence, the present appeal.
3. As appellant has pleaded his inability to engage a counsel on account of his poor condition, the Bench requested Ms. Krati Singh, Advocate to act as amicuscurie for which she agreed.
4. Ld. Counsel for the appellant submits that the impugned order is not sustainable in law as the same has been passed beyond the show cause notice and the Order-in-Original. She further submits that in the impugned order, the Ld. Commissioner has held that the appellant has recovered the service tax from Markfed for supplying labour on daily basis and loading & unloading. She further submits that neither in the show cause notice nor in the Order-in-Original it has been mentioned that the appellant has recovered the service tax from the Markfed. She further submits that this finding of the Commissioner under Section 73A of the Act is beyond the show cause notice and the Order-In-Original. She further submits that the appellant does not fall in the definition of Manpower Recruitment Agency Services as provided in Section 65(68) which is reproduced herein below:-
“manpower recruitment or supply agency” means any person engaged in providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to any person.
4.2 She further submits that the entire demand is barred by limitation as the show cause notice was issued on 20.04.2011 for the period 10.07.2006 to 30.11.2007. She further submits that the revenue has failed to prove any of the ingredients mentioned in Section 73(1) for invoking the extended period namely;
“(a) fraud; or
(b) Collusion; or
(c) willful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Chapter or of the rules thereunder with intent to evade payment of service tax”.
5. On the other hand, Ld. AR reiterated the findings of the impugned order.
6. After considering the submissions of both the parties and perusal of the material on record, we find that the appellant is only supplying the labour on daily basis and also for loading & unloading to Markfed but he does not fall under the definition of Manpower Recruitment Agency as provided in Section 65(68) of the Finance Act, 1994 and therefore not liable to pay any service tax on the said charges.
7. Further, we find that the impugned order is beyond the show cause notice and the Order-in-Original because in the show cause notice as well as in the Order-in-Original it has not been stated that the appellant has recovered service tax from the Markfed and not deposited the same to the Government Exchequer in terms of the provisions in Section 73(A) of the Act. This finding of the Ld. Commissioner (Appeals) is not sustainable in law as the same is beyond the show cause notice and the Order-In-Original and further alleged services for loading and unloading Taucks/LCV are not covered under manpower recruitment or supply agency as provided in Section 65(68) of the Finance Act, 1994.
8. In view of this, we hold that the impugned order is not sustainable in law and thereafter, we set aside the same by allowing the appeal of the appellant with consequential relief if any, as per law.
(Operative part of the order pronounced the open court)
