2018 (9) TMI 387 – CESTAT CHENNAI – TMI – Manpower recruitment and supply service – engaging labourers for harvesting sugarcane – Contention of the department is that the charges towards supply of cane harvesting labourers are recovered from the farmers at the rate accepted by the farmers and therefore the said activity would be covered within the definition of manpower recruitment or supply agency service – Held that:- It is explained by the appellant that there is no employer and employee relationship between the cutting labourers and the appellant. The appellant company has no say in the rate for cutting demanded by the labourers and the labourers have got every right to deny to cut for a particular sugarcane grower. The mill simply manufactures the sugar with regard to the availability of the cutting labourers only. Being a Government undertaking, it can be seen that all appointments are to be made in the muster roll of the sugar mill – it cannot be said that the appellants have p
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f intelligence received that the appellants are providing taxable services on manpower recruitment or supply agency service, but not taken registration and are not paying service tax, investigations were conducted. It was revealed that the appellants have allotted certain agricultural areas for the purpose of procurement of sugarcane cultivated by farmers within their area. These farmers who intend to cultivate sugarcane sell their produce to the appellant s factory. For this purpose, the farmers are required to get registered with the appellant s factory. As per the said agreement executed by the farmers, they cannot deal or sell their sugarcane in any manner other than without the written order of the appellant factory. It is also the responsibility of the farmers to harvest and deliver the sugarcane at the factory gate of the appellant. In the case of harvesting, labourers (manpower) will be arranged by the appellant factory and the cane cutting charges will be recovered by the appe
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factured by the factory is also controlled by the Government. Further, the price of sugarcane procured is also periodically fixed by the Government. The employees of the sugar mill in the muster roll of the mill which in turn is controlled by the Government of Tamilnadu. The only object of the mill is to manufacture sugar and sell such sugar at the price fixed by the State Government for the public distribution system. As per the policy of the Government, the sugar mill cannot involve in an activity other than those activity fixed by the Government. 2.1 The appellant manufactures sugar by crushing sugarcane grown by the farmers / agriculturists who own lands. The State Government has also earmarked the area or places or jurisdiction from where the sugarcane can be procured from the growers / farmers thereby encouraging the cultivation activities. The crushing of sugarcane for manufacture is a seasonal one and totally dependent on the timely and uninterrupted supply of sugarcane by the
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has no say whatever in fixing the cutting price of the sugarcane. The farmer alone is liable to pay cutting charges to the labourers and not the sugar mill. To ensure that the sugarcane is harvested and there is regular supply during the period of crush of sugarcane, the mill merely identifies the availability of the labourer for cutting the sugarcane, keep track and maintain some records about the availability of such labourers. The amount so deducted from the price of the sugarcane is paid as wages for the cutting labourers on weekly basis. The payment for the supply of sugarcane is not given in advance and paid only after such completion of supply sugarcane by the farmers. However, the wages for harvesters / labourers is paid on weekly basis as these labourers will not wait till the payment for the sugar supplied is made to the appellant factory. The facility is only for identifying the sugarcane growers as well as harvesters and it does not have anything to do with the arrangement
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agency service under Section 65(68) of the Finance Act, 1994. The appellant has replied to the show cause notice dated 5.4.2011. It is explained by the appellant that there is no employer and employee relationship between the cutting labourers and the appellant. The appellant company has no say in the rate for cutting demanded by the labourers and the labourers have got every right to deny to cut for a particular sugarcane grower. The mill simply manufactures the sugar with regard to the availability of the cutting labourers only. Being a Government undertaking, it can be seen that all appointments are to be made in the muster roll of the sugar mill. From the facts on record, it cannot be said that the appellants have provided harvesting labourers to the sugarcane growers for harvesting the sugarcane. The Tribunal on identical set of facts had considered the issue and held that the sugarcane growers themselves are encouraging the harvesting labourers and as a mere facilitation, the amo
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