2026-VIL-444-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Manpower Supply Service, Test to determine the employer-employee relationship - Appellant engaged independent job workers for specific production processes within its factory premises, paid on item-rate/tonnage basis, under the contractors' control and supervision - Revenue classified this as Manpower Recruitment and Supply Service under the partial reverse charge mechanism – whether the contracts entered into by the appellants, under which specific works are executed on an output or piece-rate basis, with raw materials and equipment supplied by the appellants and work carried out under their supervision, constitute “manpower supply services” liable to service tax under the partial RCM or whether the contractors are independent job workers rather than mere suppliers of contract labour - HELD - The contracts for execution of specified jobs, where consideration is linked to output or piece-rate basis and the workmen are not integrated into the hiring organisation, cannot be classified as manpower supply services. Applying the 'control test' and 'integration test' laid down by the Supreme Court in Achchey Lal, the workmen are job workers and not mere suppliers of contract labour - The degree of control rests predominantly with the contractor, and the workmen are neither integrated into nor directly remunerated by the appellant's organization. The consistent ratio emerging from judicial precedents is that such contracts do not constitute manpower supply services. In the absence of any distinguishing facts or contrary material, the impugned orders are set aside and the appeals are allowed
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