Custom, Excise & Service Tax TribunalThe Amaravathi Co Operative Sugar Mills ... vs Coimbatore on 5 July, 2018IN THE CUSTOMS, EXCISE & SERVICE TAX
                      APPELLATE TRIBUNAL
                 SOUTH ZONAL BENCH AT CHENNAI


                         ST/497/2011


(Arising out of Order-in-Original No. 09/2011 Commr. dated
30.05.2011 passed by the Commissioner of Customs, Central
Excise & Service Tax. Coimbatore).


M/s. The Amaravathi Co-operative Sugar Mills Ltd.: Appellant

             Vs.

CCE & ST, Coimbatore                             : RespondentAppearance

Shri T.R. Ramesh, Advocate,
for the Appellant

Shri K.Veerabhadra Reddy, JC (AR)
for the Respondents.CORAM :Hon'ble Shri Madhu Mohan Damodhar, Member (Technical)
Hon'ble Shri P. Dinesha, Member (Judicial)


                        Date of Hearing/Decision: 05.07.2018



             FINAL ORDER No.   _41991_/2018

Per Madhu Mohan Damodhar

     The facts of the case are that based on investigation the

department had the view that the appellants were providing

taxable services under the category of "Man Power Recruitment or

Supply Agency Service" as defined inSections 65&68and65

(105) (k)of the Finance Act, 1994 and had received an amount of2Rs. 19,42,73,055/- for the period 01.04.2006 to July 2009, on

which service tax liability of Rs. 2,29,69,664/- have not been

discharged.      SCN dated 27.07.2010 was issued proposing to

demand and recover the service tax not paid and also imposition

of penalties under various provisions of law.    The adjudicating

authority vide the impugned order dated 30.05.2011 confirmed

the proposed demand with interest and also imposed penalties

underSection 78of the Finance Act, 1994 and also penalty underSection 77ibid. Hence the appellants are before this forum.2.1   Today when the matter came up for hearing, on behalf of

the appellant, Ld. Advocate Shri T.R. Ramesh submits that in

respect of the same appellant for the subsequent period the

adjudicating authority vide order No. CBE/ST/21 & 22/2016-

Commr. dated 30.06.2016 dropped the proceedings initiated

against them in the related SCN.2.2   Ld. Advocate also submits that even in the facts of the

present appeal also, the sugarcane farmers had requested the

appellant to arrange for persons to cut the sugarcane for the mills

and accepted the proposals for deducting the cost incurred

towards the labour charges payable to the contractor. He submits

that the issue in this appeal is covered in their favour by the

judgment of the Hon‟ble High Court of Bombay in CCE & ST,

Aurangabad Vs. Shri Samarth Sevabhavi Trust - 2016 (41) STR

806 (Bom.)and inCCE & ST Vs. Godavari Khire Cane Transport

Co. (P) Ltd.-    2015 (38)STR 468 (Bom.).He submits that the3very same issue has also been decided by the Tribunal in their

favour in CCE, Kolhapur Vs. Shriram Sao Tvs Ltd. - 2015 (39) STR

75 (Tri.-Mum.).3.1     On the other hand, Ld. AR supports the impugned order.

He further points out that the subsequent adjudication order

relied upon by the Ld. Advocate the adjudicating authority has

taken note of the practice which was followed for the earlier

period covered by the OIO No. 9/2011 dated 30.05.2011 have

now been discontinued; that the farmers or growers have been

subsequently negotiating with the gang leaders directly to do the

harvesting     of   sugarcane      for   which   they      pay   them

harvesting/cutting charges at agreed rates by the sugar mill. The

sugar mill, in turn, adjusts these charges from the amount it

subsequently     pays   to   the   farmers/growers   for    supply     of

sugarcane.3.2     Ld. AR submits that it is the very same earlier order 9/2011

dated 30.05.2011 which is the impugned order in the present

appeal. In the circumstances, the subsequent order relied upon

by the Ld. Advocate is by no means applicable to the present

case.3.3     Ld. AR also draws our attention to the decision of           Shri

Samarth Sevabhavi Trust (supra) relied upon by the Ld. Advocate

to point out that the issue that came up for decision there in

related only to the dispute on whether the assesse was a4commercial concern or otherwise and whether there would be any

tax liability on such assessee prior to the amendment.


3.4    Ld. AR also points out that such facts of the Shri Samarth

Sevabhavi Trust (supra) as per the man power were supplied of

labour was made directly to the sugar factory whereas in the

present case the labours have been supplied to the farmers

directly themselves.4.     Heard both sides and have gone through the facts of the

matter.5.1    Ld. AR has been at pains to point out the difference in

respect of the practice being followed by the appellant‟s herein

during the period impugned in this appeal and that covered in the

subsequent order dated 30.06.2016 relied                upon by the Ld.

Advocate.         In the said subsequent order in the finding portion

English translations of samples of agreements between the

sugarcane growers and the sugar mills have been reproduced.

From these, it can be gleaned that the farmer has negotiating

with one harvesting contractor, however has requested the sugar

mill   to    deduct     the    harvesting   charges    from    the   agreed

procurement price and pay the same to the harvesting contractor.

In the present appeal, in page 104, we find the English translation

of one such agreement entered for the previous period, namely

for the years 2008-09.             As per this earlier agreement, the

sugarcane farmers are accepting the proposal of sugar mill to

deduct      the    labour     charges   payable   to   the    recommended5contractor and for the payment to such contractor directly by the

mills out of the sugarcane price payable to them.


5.2   No doubt, in statements dated 10.12.2009 sugarcane

farmers have stated that the appellants appoint only the

contractors to arrange for harvesting the sugarcane from the field

on payment of cutting charges and payment of cutting charges as

deducted from the amount payable for sugarcanes to the

concerned farmers.    However, from para 6.5 of the impugned

order, it becomes evident that these statements given by the

concerned farmers have been retracted during the course of cross

examination.   From page 130 of the appeal paper book, it is seen

that pursuant to enquiries by the department by the Asst.

Commissioner (Preventive),     appellant‟s   have interalia clarified

that the sugar mill is not engaging the cane cutting labourers but

that the sugarcane growers themselves fix the gang leaders from

their area of operation to harvest sugarcane.     These averments

are reiterated in reply to the SCN dated 27..07.2010, filed at page

60 of the appeal paper book.5.3   Viewed in this context, we do not find any substantial

difference in the practice followed during the impugned period and

that followed in the period covered in subsequent order of the

Commissioner dated 30.06.2016.5.4   We also find that the facts of the impugned appeal are

covered by the decision relied upon by the Ld. Advocate. The Ld.

AR has contended that in the judgment in              Shri Samarth6Sevabhavi Trust (supra), the issue dealt with was only whether

the assessee therein was a commercial concern. However, on a

closer reading of the said judgement, we do find from paragraphs

7-9 thereof, that the Hon‟ble High Court has also held that no

man power was supplied by the respondents to the sugar factory

to substitute supply of man power and hence it did not come

within the mischief of the term „Man Power Recruitment or Supply

Agency". We also find that the Tribunal decision in Shriram Sao

Tvs Ltd. (supra), also relied upon by the Ld. Advocate is on in all

fours to the facts of the appeal at hand.6.    Following the ratio already laid down in the decisions

discussed supra, we find that the impugned order cannot sustain

and therefore will have to be set aside, which we hereby do.

Appeal is therefore allowed with consequential benefits, if any, as

per law.(Order dictated and pronounced in the open Court)




  (P.DINESHA)                    (MADHU MOHAN DAMODHAR)
MEMBER (JUDICIAL)                    MEMBER (TECHNICAL)

BB