ADIRAJ MANPOWER SERVICES PVT. LTD. versus COMMISSIONER OF CENTRAL EXCISE PUNE

Citation: [2022] 1 S.C.R. 1150 · Decided: 18-02-2022 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Dismissed

Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 1 S.C.R.
[2022] 1 S.C.R. 1150
1150
ADIRAJ MANPOWER SERVICES PVT. LTD.
v.
COMMISSIONER OF CENTRAL EXCISE PUNE II
(Civil Appeal No. 313 of 2021)
FEBRUARY 18 , 2022
[DR DHANANJAYA Y CHANDRACHUD AND
SURYA KANT, JJ.]
The Contract Labour (Regulation and Abolition) Act, 1970 –
Service Tax –Appellant obtained service tax registration under the
category of ‘Manpower Recruitment or Supply Agency Service’ –
Appellant entered into an agreement with a company ‘S’ and was
required to provide personnel for manufacturing activities-
Commissioner of Central Excise, Pune issued show cause notice to
appellant demanding service tax – Allegations were that appellant
had failed to assess and discharge service tax liability regarding
supply of manpower to company ‘S’, suppressed the facts and made
a misrepresentation by filling incorrect ST-returns – The adjudicating
authority held that appellant habitually delayed paying service tax
and that supply of labour by appellant to ‘S’ on piecemeal basis did
not alter the characteristic of manpower services provided – Order
was challenged in appeal before Tribunal – Tribunal held that
service provided by appellant to ‘S’ was not in nature of job work
service liable to be exempted, but in the nature of contract labour –
On appeal, held: Issue is whether the apellant is job worker or is
merely a supplier of contract labour for the work of the establishment
– The fact that the appellant is not a job worker is evident from a
conspicuous absence in the agreement of crucial contractual terms
which would have been found had it been a true contract – On
reading the agreement as a whole, it is apparent that the contract is
pure and simple a contract for the provision of contract labour –
An attempt has been made to camouflage the contract as a contract
for job work to avail of the exemption from the payment of service
tax – Judgment of Tribunal does not suffer from any error of
reasoning.
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Dismissing the appeal, the Court
HELD:1.1. The substratum of the agreement between the
appellant and company ‘S’ deals with the regulation of the
manpower which is supplied by the appellant in his capacity as a
contractor. The fact that the appellant is not a job worker is
evident from a conspicuous absence in the agreement of crucial
contractual terms which would have been found had it been a
true contract for the provision of job work in terms of Para 30(c)
of the exemption notification. There is a complete absence in the
agreement of any reference to: (i) the nature of the process of
work which has to be carried out by the appellant; (ii) provisions
for maintaining (a) the quality of work; (b) the nature of the facilities
utilised; or (c) the infrastructure deployed to generate the work;
(iii) the delivery schedule; (iv) specifications in regard to the work
to be performed; and (v) consequences which ensue in the event
of a breach of the contractual obligation. [Para 16][1161-D-G]
1.2. The decisions of CESTAT relied upon by the appellant
also do not help their submissions as they are fact-specific and
based on a reading of the contracts in those cases. In this case,
though ostensibly, the agreement contains a provision for payment
on the basis of the rates mentioned in Schedule II, the agreement
has to be read as a composite whole. On reading the agreement
as a whole, it is apparent that the contract is pure and simple a
contract for the provision of contract labour. An attempt has been
made to camouflage the contract as a contract for job work to
avail of the exemption from the payment of service tax. The
judgment of the Tribunal does not, in the circumstances, suffer
from any error of reasoning. [Para 17][1161-G-H; 1162-A-B]
Om Enterprises v. Commissioner of Central Excise,
Pune-I 2018 (17) G.S.T.L. 260 ; Bhagyashree
Enterprises v. Commissioner 2017 (3) G.S.T.L.515;
Dhanashree Enterprises v. Commissioner 2017 (5)
G.S.T.L. 7 2019 SCC OnLine; S. Balasubramani v.
Commissioner 2019 SCC OnLine CESTAT 480-
referred to.
ADIRAJ MANPOWER SERVICES PVT. LTD. v. COMMISSIONER OF
CENTRAL EXCISE PUNE II
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SUPREME COURT REPORTS
[2022] 1 S.C.R.
CIVIL APPELLATE JURISDICTION: Civil Appeal No.313 of
2021.
From the Judgment and Order dated 15.07.2019 of the Customs,
Excise & Service Tax Appellate Tribunal, West Zonal Bench, Mumbai
in Service Tax Appeal No.86153 of 2015 in Final Order No.A/86237 of
2019.
Tarun Gulati, Sr. Adv., Rohit Rathi, Kumar Sa

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