Custom, Excise & Service Tax Tribunal
Patna vs Jai Mata Di Retired Employees ... on 7 July, 2025
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH: KOLKATA
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 76015 of 2015
(Arising out of Order-in-Original No. 12/ST/Commr./2015 dated 04.08.2015 passed
by the Commissioner of Central Excise and Service Tax, Patna Central Revenue
Building, (Annexe) Birchand Patel Path Patna (Bihar)800001)
M/s. Jai Mata Di Retired Employees Association, : Appellant
W/s-5/56, Upper Police Chowki,
Kankarbagh Colony, Dist Patna-800020
VERSUS
Commissioner of CGST & Central Excise, Patna : Respondent
Central Revenue Building (Annexe), Birchand Patel Path, Patna (Bihar)800001 WITH Service Tax Appeal No. 76060 of 2015 (Arising out of Order-in-Original No. 12/ST/Commr./2015 dated 04.08.2015 passed by the Commissioner of Central Excise and Service Tax, Patna Central Revenue Building, (Annexe) Birchand Patel Path Patna (Bihar)800001) Commissioner of CGST & Central Excise, Patna : Appellant Central Revenue Building (Annexe), Birchand Patel Path, Patna (Bihar)800001 VERSUS M/s. Jai Mata Di Retired Employees : Respondent Association, W/s-5/56, Upper Police Chowki, Kankarbagh Colony, Dist Patna-800020 APPEARANCE:
Shri Aditya Dutta, Advocate for the Assessee Shri D. Sue, Authorized Representative for the Revenue CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL) FINAL ORDER NOs.76705-76706/2025 DATE OF HEARING: 19.06.2025 DATE OF PRONOUNCEMENT: 07.07.2025 Page 2 of 9 Appeal Nos.: ST/76015, 76060/2015-DB Order: [PER SHRI K. ANPAZHAKAN] M/s. Jai Mata Di Retired Employees Association (hereinafter referred to as the "appellant") is a society consisting of retired employees with the Railway Department in their capacity to discharge certain activities/functions pertaining to the Indian Railways. The function of the Society is that after procurement of certain tenders floated by the Indian Railways, if selected, they execute certain works pertaining to the Railways as per the tender awarded to them. Since workforce in the society consists of persons who had previous experience of executing such functions and as per requirement of a specific tender, they used to undertake the jobs by deploying staff having experience in that field. Sometimes, they had to arrange and provide 'tools and tackles etc. for execution of the particular job by engaging persons conversant with such kind of jobs.
2. In the year 2011, the Central Excise and Service Tax Department initiated certain investigations about the leviability of service tax on the services rendered by them to Railways. The society informed that they were not conversant with the service tax matters and hence they had not paid any service tax on the consideration received by them from the Railway 2.1. In the year 2012, the Secretary of the Society was summoned and he gave a statement that the society provides manpower supply services to the Railways and he was aware that the services provided by them are taxable under service tax law and further he stated that no service tax had been paid. During the course of such investigation he had Page 3 of 9 Appeal Nos.: ST/76015, 76060/2015-DB deposited an amount of Rs. 23,92,736/- on 25.09.2013 towards their service tax liability.
3. Subsequently, a SCN dated 23.10.2013 was issued to the appellant for the period 2008-09 to 2013-14 (upto 13.09.2013) demanding service tax of Rs.1,04,39,355/- along with interest. Penalty has also been proposed in the Notice under the sections 78, 77 and 70 of Finance Act, 1994 read with Rule 7C of Service Tax Rules, 1994.
4. The Government has introduces VCES, 2013 scheme on 25.11.2013. The appellant opted for the scheme and deposited a further amount of Rs. 40,00,000/- under the said Scheme towards their purported service tax liability.
4.1. The benefit of the VCES Scheme was denied to the appellant by the Designated Authority of VCES Scheme on the ground that a summon under Section 14 of the Central Excise Act, 1944 was issued to them before 1st March, 2013 and an enquiry was being conducted by the Department against them and the same was pending. Against the denial of benefit of the scheme, the appellant had approached the Hon'ble Patna High Court vide Civil Writ No. CWJC-2158/2015. Before decision in the Writ Petition, the Commissioner of Central Excise & Service Tax, Patna adjudicated the SCN dated 23.10.2013 vide the impugned Order dated 04.08.2015 wherein the entire service tax demand of Rs.1,04,39,355/- was confirmed and Rs. 66,68,796/- [Rs. 23,92,736/- + Rs. 40,00,000/-] already paid by the appellant was appropriated. The Ld. adjudicating authority also demanded interest and imposed equal amount of tax confirmed as penalty. Further penalty of Rs. 5000/- was imposed under section 77. Fine Page 4 of 9 Appeal Nos.: ST/76015, 76060/2015-DB for delay in for payment was also imposed under Rule 7C of the Service Tax Rules, 1994. Also, a penalty of Rs. 5000/- was imposed upon Shri Arvind Kumar, Secretary under section 77 ibid.
4.2. The Civil Writ No. CWJC-2158/2015 was disposed of by the Hon'ble Patna High Court vide Order dated 09.01.2018 wherein the Hon'ble High Court has granted liberty to the appellant to approach the CESTAT.
4.3. Accordingly, the instant appeal has been filed by the appellant/assessee against the aforesaid Order-in-Original.
4.4. Aggrieved by the imposition of a lesser amount of penalty of Rs.37,70,559/- instead of Rs.1,04,39,355/- on the assessee under Section 78 of the Finance Act, 1994, the Revenue has also filed an appeal against the impugned order.
5. The appellant/assessee submits that in the impugned order, the Ld. adjudicating authority has confirmed the demand of service tax under the category of 'manpower recruitment or supply agency service'.
5.1. The appellant also submits that as per Section 65 (105) (k) of Finance Act, 1994 as amended 'Manpower recruitment or supply agency service' is defined as any service provided or to be provided to any person, by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner; that Explanation appended to the said definition states for the purposes of this sub-clause, recruitment or supply of manpower includes services in relation to pre-recruitment screening, verification Page 5 of 9 Appeal Nos.: ST/76015, 76060/2015-DB of the credentials and antecedents of the candidate and authenticity of documents submitted by the candidate.
5.2. In their case, the appellant submits, after getting the tender floated by Indian Railways, they have to enter into an agreement showing the value of the contract and Schedule of Rate against 'Name of Work. 'Name of Work' indicates Manning of TSS (Railway Traction Sub Station) at DNR (Danapur Railway Station), ARA etc over a particular division of the Railways. TSS in Railways means Railway Traction Sub-Station; the nature of work provided by them are enumerated in detail under the 'Special Conditions of Contract & Payment. The appellant submits a specimen copy of the contract containing the works undertaken by them.
5.3. Moreover, it is their submission that the Scope of work as mentioned in the Contract clearly reveals that the works undertaken by them does not related to engagement of man power alone for the work. The manpower has been used by them to undertake the work. Thus, the appellant submits that the work undertaken by them would not fall within the the definition of 'manpower recruitment or supply agency service'. Accordingly, the appellant submits that the demand of service tax confirmed in the impugned order under the category of manpower recruitment or supply agency service' is not sustainable.
6. In respect of the appeal filed by the assessee, the Ld. Departmental Representative reiterated the findings in the impugned order. With regard to the Revenue's appeal, he has reiterated the grounds urged by the Revenue in the appeal petition.
Page 6 of 9Appeal Nos.: ST/76015, 76060/2015-DB
7. Heard both sides and perused the appeal records.
8. We observe that the appellant/assessee is a society consisting of retired employees well versed with the work related to Railways. They execute certain works pertaining to the Railways as per the tender awarded to them. Since workforce in the society consists of persons who had previous experiences of executing such functions, they used to undertake the jobs by deploying staff having experience in that field. For execution of the particular job, the Society engages persons conversant with such jobs. The department considered the activity undertaken by the appellant as a taxable service liable for service tax under the category of 'manpower recruitment or supply agency service' and confirmed the demand of service tax under the said category. The submission of the appellant is that they engage persons and undertake complete works pertaining to railways and hence the said activity cannot be considered as a taxable service liable for service tax under the category of 'manpower recruitment or supply agency service'.
8.1. For ready reference, the definition of 'Manpower recruitment or supply agency service' as defined under Section 65 (105) (k) of Finance Act, 1994 is reproduced below:
any service provided or to be provided to any person, by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner Page 7 of 9 Appeal Nos.: ST/76015, 76060/2015-DB Explanation appended to the said definition states that for the purposes of this sub-clause, recruitment or supply of manpower includes services in relation to pre-recruitment screening, verification of the credentials and antecedents of the candidate and authenticity of documents submitted by the candidate.
8.2. We have perused the specimen copy of the contract submitted by the appellant. Some salient features of the work/jobs entrusted to the appellant as mentioned in the Contract are reproduced below: -
'Operation of all equipment of TSS along with minor repair work will be the responsibility of contract staff like us.
The contractor will do minor repair works including replacement of defective parts.
The contractor will do cleaning of weeds and plants in the year.
The contractor will also perform colour washing, fencing painting every year.
The contractor will man the TSS round the clock for all days including Holidays and Sundays.
8.3. A perusal of the Scope of works as mentioned in the Contract reproduced above reveals that the works undertaken by the appellant does not start and end with recruitment of persons and supplying those persons to Railways, so as to categorize the work under the category of 'manpower recruitment or supply agency service'. We observe that the Appellant Society is not a 'man Page 8 of 9 Appeal Nos.: ST/76015, 76060/2015-DB power supply agency'. We find that the appellant has undertaken the work of Manning of Railway Traction Sub Station at Danapur Railway Station. This indicates that the appellant have undertaken the complete work related to manning the Railway Traction Sub-Station and not merely engaged the persons and gave it to Railways. The Scope of work as mentioned in the Contract clearly reveals that the works undertaken by them does not related to engagement of man power alone for the work. The manpower has been used by them to undertake the work. Hence, we hold that the said activity undertaken by the appellant/assessee cannot be categorized as 'man power recruitment and supply agency service'. Accordingly, we hold that the demand of service tax confirmed in the impugned order under the category of manpower recruitment or supply agency service' is not sustainable and hence we set aside the same.
8.4. As the demand itself is not sustainable, the question of demanding interest or imposing penalty under Section 78 of the Act does not arise. We also hold that no fine is imposable under Rule 7C of the Service Tax Rules, 1994. Also, in these facts and circumstances, no penalty is imposable on Shri Arvind Kumar, Secretary, under Section 77 of the Finance Act, 1994. Accordingly, the fine and personal penalty imposed are also set aside.
9. Regarding the appeal filed by Revenue, we do not find any merit in their appeal and accordingly, the same is rejected.
10. In view of the above findings, the appeal filed by the assessee is allowed, with consequential relief, Page 9 of 9 Appeal Nos.: ST/76015, 76060/2015-DB if any, as per law and the appeal filed by the Revenue is rejected.
(Order pronounced in the open court on 07.07.2025) (ASHOK JINDAL) MEMBER (JUDICIAL) (K. ANPAZHAKAN) MEMBER (TECHNICAL) rkp