Custom, Excise & Service Tax Tribunal
Rama Enterprises vs Hyderabad-Iv on 9 January, 2026
1 Appeal Nos. ST/20573 &
20575/2014
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
HYDERABAD
REGIONAL BENCH - COURT NO. - I
Service Tax Appeal No. 20573 of 2014
(Arising out of Order-in-Appeal No.227/2013 (H-IV) S. Tax dated 30.12.2013 passed by
Commissioner of Customs, Central Excise & Service Tax (Appeals - II), Hyderabad)
M/s Rama Enterprises .. APPELLANT
2-60, Satamarai Village,
Shamshabad Mandal,
Rangareddy District,
Telangana - 500 052.
VERSUS
Commissioner of Customs, Central .. RESPONDENT
Excise and Service Tax Hyderabad - IV Posnett Bhawan, Tilak Road, Ramkoti, Hyderabad, Telangana - 500 001.
AND Service Tax Appeal No. 20575 of 2014 (Arising out of Order-in-Appeal No.231/2013 (H-IV) S. Tax dated 30.12.2013 passed by Commissioner of Customs, Central Excise & Service Tax (Appeals-II), Hyderabad) M/s Vinayaka Enterprises .. APPELLANT H.No. 1-20/1, Satamarai Village, Shamshabad Mandal, Rangareddy, Telangana - 501 218.
VERSUS Commissioner of Customs, Central .. RESPONDENT Excise and Service Tax Hyderabad - IV Posnett Bhawan, Tilak Road, Ramkoti, Hyderabad, Telangana - 500 001.
APPEARANCE:
Shri B. Venugopal, Advocate for the Appellant.
Shri K. Raji Reddy, Authorized Representative for the Respondent.
CORAM: HON'BLE Mr. A.K. JYOTISHI, MEMBER (TECHNICAL) HON'BLE Mr. ANGAD PRASAD, MEMBER (JUDICIAL) 2 Appeal Nos. ST/20573 & 20575/2014 FINAL ORDER No. A/30018-30019/2026 Date of Hearing: 05.08.2025 Date of Decision: 09.01.2026 [ORDER PER: ANGAD PRASAD] M/s Rama Enterprises (hereinafter referred to as appellant) has filed Appeal No. ST/20573/2014 against the Order-in-Appeal No. 227/2013 (H-IV) S. Tax dated 30.12.2013 passed by Commissioner of Customs, Central Excise & Service Tax (Appeals - II), Hyderabad.
2. M/s Vinayaka Enterprises has filed Appeal No. ST/20575/2014 against the Order-in-Appeal No. 231/2013 (H-IV) S. Tax dated 30.12.2013 passed by Commissioner of Customs, Central Excise & Service Tax (Appeals-II), Hyderabad.
3. In these both appeals issues are same, so heard simultaneously to decide together.
4. Appellants are providing certain 'quality works' in the manufacturing unit of M/s Bagga Distilleries Hyderabad Pvt Ltd., who are engaged in the manufacture alcoholic beverages (IML).
5. The Department issued Show Cause Notices against the appellants alleging that the services rendered by the appellants in terms of the agreement mentioned above constitutes supply of manpower service and therefore, attracts Service Tax under the category of 'Manpower Recruitment or Supply Agency Services' under Section 65(105)(k) read with Section 65(68) of the Finance Act, 1994.
6. The appellants have filed their replies on various grounds, both on merits as well as on limitation. The Adjudicating Authority passed the OIO's 3 Appeal Nos. ST/20573 & 20575/2014 and confirmed the demand with interest and penalty as proposed in Show Cause Notices.
7. Appellants have filed appeals before the Commissioner of Customs, Central Excise and Service Tax (Appeals-II), Hyderabad. They were directed to pre-deposit 50% of Service Tax demand. The appellants filed a misc. application requesting for modification of Stay orders with regard to pre- deposit directions, which were rejected and the Appeals were dismissed for non-compliance of the said order in terms of Section 35F of Customs Excise Act, 1944.
8. Appellants have filed the appeals against those O-I-A and the Hon'ble Tribunal vide Final Order No. 25489-25493/2013 dated 25.06.2013 set asided the order and remanded the matter with observations that the activities carried out by the appellants, prima facie, would not be covered under "Manpower Recruitment or Supply Agency Services" and directed to decide the case on merits.
9. Learned Commissioner (Appeals), upheld the order of the Adjudicating Authority and confirmed the demand of Service Tax under the category of 'Manpower Recruitment or Supply Agency services', along with interest and with some modification about penalty under Section 77 and 78 of the Finance Act, 1994.
10. Learned Counsel for the appellants submits that the "Contract Deed"
between appellants and M/s Bagga Distilleries Hyderabad Pvt Ltd., clearly shows that the activity agreed under the contract for providing 'quality work' i.e., washing activities, stacking in godowns, cleaning of washing area, bottling area, blending area godowns and surroundings using the manpower 4 Appeal Nos. ST/20573 & 20575/2014 of the contractor employed by the M/s Bagga Distilleries Hyderabad Pvt Ltd., and not for supply of manpower by the appellants.
11. Learned Counsel for the appellants submits that the payment are based on the work carried out by the contractor and not on the number of persons employed for the work, which are a clear indication that the activity under the contracts are not for 'supply of manpower' at all.
12. Learned Counsel for the appellants submits that the appellant are responsible for fixed deliverables and responsibilities for an agreed under the Contract Deed.
13. Learned Counsel for the appellants also relied on the following case laws:
(i) Uniworth Textiles Ltd., Vs Commissioner of Central Excise, Raipur [2013 (288) E.L.T. 161 (S.C.)]
(ii) S.S. Associates Vs Commissioner of Central Excise, Bangalore [2010 (19) S.T.R. 438 (Tri-Bang)]
(iii) Bhagyashree Enterprises Vs Commissioner of Central Excise, Pune-I [2017 (3) G.S.T.L. 515 (Tri-Mumbai)]
(iv) Shivshakti Enterprises Vs Commissioner of Central Excise, Pune [2016 (41) S.T.R. 648 (Tri-Mumbai)]
14. Learned AR reiterates the findings given by the Lower Authorities.
15. We have considered the submissions made by both sides and perused the records.
16. The issue is, whether the services rendered by the appellants are classifiable under holding the "Manpower Recruitment and Supply Agency" or otherwise?
5 Appeal Nos. ST/20573 &20575/2014
17. The definition of the 'Manpower Recruitment and Supply Agency' under Section 65(105)(68) reads as under:
(68) "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 other person;
18. As per the above definition, we find that the activities should be providing of any service directly or indirectly in any manner for recruitment or supply of manpower temporarily or otherwise.
19. The Contract Deed between appellants and M/s Bagga Distilleries Hyderabad Pvt Ltd., are very important documents for disposal of these appeals. By this contract, the M/s Bagga Distilleries Hyderabad Pvt Ltd., has agreed to engage the contractor (Appellants) for the Quality Work i.e. unloading, washing activities, stacking in godowns, cleaning of washing area, bottling area, blending area, godowns and surroundings.
20. From the recitals, it is clear that the activity agreed under the contract is for providing 'quality work', i.e., washing activities, stacking in godowns, cleaning of washing area, bottling area, blending area, godowns and surroundings using the manpower of the contractor, employed by the appellant himself and not for supply of manpower as such to M/s Bagga Distilleries Hyderabad Pvt Ltd. As per the contract, the appellants will be paid based on the work carried out by the contractor and not on the basis of number of persons employed for the work, which is a clear indication that the activity under the contract is not for 'supply of manpower' at all. It is also important that the manpower works under the control and supervision of the appellants and not under the control of supervision of M/s Bagga Distilleries Hyderabad Pvt Ltd. Therefore, the contract clearly shows that 6 Appeal Nos. ST/20573 & 20575/2014 there is no supply of manpower, and it is for providing certain specified works as mentioned in the contract. Hence, demand based on classification of the services provided by the appellants as supply of manpower service would not sustainable as per law.
21. The Co-ordinate Bench, Bangalore in the case of S.S. Associates Vs Commissioner of Central Excise, supra, wherein, it is also held as follows:
"9. On a careful consideration of the above reproduced is from the entire case papers, we find that the contract which has been given to the appellants is for the execution of the work of loading, unloading, bagging, stacking destacking etc. In the records, we find that there is no whisper of supply manpower to the said M/s Aspin Wall & Co. or any other recipient of the services in both these appeals. As can be seen from the reproduced contracts and the invoices issued by the appellant that the entire essence of the contract was an execution of work as understood by the appellant and the recipient of the services. We find that the Hon'ble Supreme Court in the case of Super Poly Fabriks Ltd., Vs CCE, Punjab (supra) in paragraph 8 has specifically laid down the ratio which is as under:
"There cannot be any doubt whatsoever that a document has to be read as a whole. The purport and object with which the parties thereto entered into a contract ought to be ascertained only from the terms and conditions thereof. Neither the nomenclature of the document nor any particular activity undertaken by the parties to the contract would be decisive."
An identical view was taken up by Hon'ble Supreme Court in the case of State of AP Vs Kone Elevators (India) Ltd., (supra) and UOI Vs Mahindra and Mahindra is a similar issues. The ratio of all the three judgments of the Hon'ble Supreme Court, is that the tenor of agreement between the parties has to be understood and interpreted on the basis that the said agreement reflected the role of parties. The said ratio applies to the current cases in hand. We find that the entire tenor of the agreement and the purchase orders issued by the appellants' service recipient clearly indicates the execution of a lump-sum work. In our opinion this lump-sum work would not fall under the category of providing of service of supply of manpower temporarily or otherwise either directly or indirectly." 7 Appeal Nos. ST/20573 & 20575/2014
22. In the case of M/s Bhagyashree Enterprises, supra, decided by Tribunal Mumbai is also important to cite wherein, Hon'ble Tribunal held as follows:
"6.3 As regards the Service Tax liability under the category of manpower recruitment or supply agency service, for the services rendered to KLL, we find that the Adjudicating Authority has misconstrued the provisions and misdirected the findings to hold that the services would fall under the category of 'manpower recruitment or supply agency services'. On perusal of the agreement entered by the appellants with KLL, we find that the said agreement specifically indicates about the consideration to be paid to the appellants based upon the number of units produced in the factory premises of KLL land there is no restriction as to the specific number of employees to be brought for such purposes; and work force employed by the appellant was on the role of the appellant only and is supervised by the appellant. In our considered view this contract cannot be considered as a contract for supply of manpower to KLL. This, in our considered view is nothing but lump-sum work awarded to appellants by KLL. We find strong force in the contentions put forth by the Learned Counsel that the issue is covered by the decision of Divya Enterprises (supra) and Ritesh Enterprises (supra)."
23. In the case of Sivashakti Enterprises Vs Commissioner of Central Excise, Pune, supra, decided by Tribunal Mumbai, it is also important to mention wherein, appellant had deploying his employees in the factory premises of Tata Motors for doing of specific job work in accordance with the purchase order placed and the manufacture paying consideration to appellant based upon the number of pieces that would be manufactured. Hon'ble Tribunal held that the lump sum work not covered under 'Manpower Recruitment or Supply Agency Service' and held not taxable. The relevant part of the decision is as under:
"5. We find that facts are not much in dispute. Appellant had deployed his employees in the factory premises of Tata Motors for doing specific job work in accordance with the purchase order placed by Tata Motors. We perused the sample / specimen of purchase orders of Tata Motors Ltd., We find that Tata Motors Ltd., had agreed to pay consideration to the appellant based 8 Appeal Nos. ST/20573 & 20575/2014 upon the number of pieces that would be manufactured by appellant in the factory premises of Tata Motors. We find that the issue is no more res- integra inasmuch as, in the case of Divya Enterprises Ltd., [2010 (19) S.T.R. 370]. Tribunal based on laser of contract purchase orders indicated execution of lump sum work as understood by appellant and service recipients. The case is in hand, the appellant as well as the service recipients understood the agreement between them as the lump sum agreement and not for supply of manpower. We find that this Bench in the case of Shriram Sao TVS Ltd., [2015 (39) S.T.R. 75], in a similar kind of service of lump sum contract for harvesting, loading and unloading of sugarcane held as under:
"4. We find that the issue is no more res-integra inasmuch as this Bench has held in the case of Bhogavati Janseva Trust Vs CCE, Kolhapur [2014 (34) S.T.R. 410 (Tri-Mum)] on an identical issue has held in favour of the assessee. The same view was expressed by the Bench in Satara Sahakari Shetu Audyogik Oos Todani Vahtook Society Vs CCE, Kolhapur p2014 (36) S.T.R. 123 (Tri-Mum)]. It was brought to our notice that identical view was expressed by the Bench in the case of Godavari Khore Cane Transport Company Pvt Ltd., Central Excise Appeal No. 19 of 2014. The judgment of the Godavari Khore Cane Transport Company Pvt Ltd., was taken in appeal by the Revenue before the Hon'ble High Court of Bombay at Aurangabad. Their Lordships has upheld the order of the Tribunal reported as in Appeal Nos. ST/256/2008, S.T./68, 7/2009-Mum [2012 (26) S.T.R. 310 (Tri-Mum)]. The ratio of the judgment of the Hon'ble High Court at Paras 6 & 7; we with utmost respect reproduce the same."
6. In view in the facts of circumstances of this case, and various judicial pronouncements, we find that the impugned order challenged by the appellant before us, is liable to be set aside and the appeal needs to be allowed to that extent. The impugned order is set aside, to the extent challenged before us and the appeal is allowed with consequential relief, if any."
24. The above decisions are squarely applicable in factual matrix, in the instant appeals.
25. Therefore, in view of the discussions, supra, and following the ratio laid down by the Co-ordinate Bench, we find that the demand under 'Manpower Recruitment or Supply Agency Service' is not sustainable. 9 Appeal Nos. ST/20573 & 20575/2014 Further, since the demand is not sustainable on merit itself, the imposition of penalty will also not sustain. Thus, in view of the same, the impugned orders are liable to be set aside.
26. Appeals allowed with consequentional benefit, if any, as per law.
(Pronounced in the open court on_09.01.2026_) (A.K. JYOTISHI) MEMBER (TECHNICAL) (ANGAD PRASAD) MEMBER (JUDICIAL) Shirisha