LCI Learning

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Raj Kumar Makkad (Adv P & H High Court Chandigarh)     21 December 2009

Merely because the department did not issue a show cause not

RELEVANT PARAGRAPH

5. I have considered the submissions made by both the sides. First of all it is required to be examined whether the service is covered by the definition or not? To appreciate the facts better, the annexure to the contract which is relevant & which is very briefly worded is reproduced below.

“RATE:

   1. House keeping work is as per minimum wage act
   2. Material loading & unloading charge Rs. 21/mericton (raw material, store & maintenance item)
   3. 20% ser vice charge on item no. I
   4. Reimbursement of pf & ESIC employer’s contribution on item no. I&2
   5. Government taxes as applicable

Scope of work for contractor: house keeping:

1. You shall keep labours as per company’s requirement for house keeping work.

2. You shall clean staff offices.

3. You shall supply drinking water & coffee to staff offices.

4. You shall clean toilets & bath rooms.

You shall do house keeping in factory premises.

Loading & unloading:

6. You shall keep lab ours as per company’s requirement for loading & unloading  purpose.

General
7. You shall comply all statutory formalities.

8. You shall pay salary to workmen regularly.

9. You shall ensure disciplined behavior from the 10 Labours, you bring inside the factory premises.

11. You shall get payment as per the record of the company.”

6. The question is whether the terms of the contract as given above is for supply of labourers or is for doing specific item of work. If it is for performance of specified items of work, the same would not be covered bythe definition of service since the service covers manpower recruitment or supply. In this case I find that serial nos. 1, 3 and 4 under Rate, serial no. 1 under “house keeping”, serial no.6 under “loading and unloading”, serial no.9 and 10 under “general” all relate to the number of labourers supplied. Nowhere in the annexure, the actual quantum of work to be done is indicated. Further,the contract also requires the contractor to provide labourers as per the company’s requirement for house keeping work, for loading and unloading purpose etc. The payment to be made by the company is related to the number of labourers supplied during a specific period and not related to the quantum of work carried out. For example, in case ofhouse keeping work, it can be related to the area of the building to be cleaned which can be given in square feet. In the case of loading and unloading it can be number of trucks or the weight of the goods loading and unloading etc. whereas both these items do not find place in the contract . Therefore, 1 am unable to appreciate the detailed arguments advanced by the learned advocate when he tried to explain why it is not a labour contract but actually a contract for specific items of work to be performed. I feel that the terms ofthe contract are very clear and this is nothing but supply of manpower and is covered by the definition of the service .Coming to the question of suppression, in view of the fact that appellant himself had surrendered the registration certificate on 01.6.2005 and within fifteen daysthe definition changed, reasonable argument would be that appellant was aware of the amendment in the law and the consequent liability to pay service tax on him. Merely because the department did not issue a show cause notice within the specific period, appellant cannot escape the liability. As pointed out by learned DR, the department cannot be said to know that appellant was engaged or continued to be engaged in supply of manpower. Therefore, it has to be held that the show cause notice is not time barred.



Learning

 1 Replies

rakesh yadav (Manager HR )     01 January 2010

thakns mr. makkar for this referances

rakesh yadav


Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register