Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(CESTAT) 508

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
S. S. Garg, Judicial Member, P. Anjani Kumar, Technical Member
Kamaldeep Enterprises – Appellant
Versus
Commissioner Of Central Goods & Service Tax – Respondent
Service Tax Appeal No. 61727 of 2018 | Service Tax Appeal No. 60335 of 2019

Advocates:
For the Appellants/Petitioners: Krati Singh, Khushbu Sood
For the Respondents: Shantanu Kumar Meena

Transportation services provided under a contract that is job-specific and remunerated on a per-kilometer basis, where the service provider retains full operational responsibility, do not fall within the definition of 'Manpower Recruitment or Supply Agency Services' under the Finance Act, 1994.

Headnote:(A) Finance Act, 1994 - Section 65(68) - Service Tax - Manpower Recruitment or Supply Agency Services - Appellant engaged in transportation of tractors on per kilometer basis - Whether activity falls under manpower recruitment or supply agency services - Held, the contractual terms show the work is job-specific and not manpower-specific; the appellant undertakes full responsibility for transportation, including accidental coverage and compliance with statutory formalities, which distinguishes it from a supply of manpower contract - Therefore, the activity is not taxable under the category of Manpower Recruitment or Supply Agency Services. (Paras 6.1 to 6.5)

(B) Penalty - Section 70 and 77 of Finance Act, 1994 - Failure to register and file returns - Although service tax demand set aside, penalty for procedural lapse (non-registration) under Section 77 is maintainable. (Para 7) Facts of the Case: The appellants are proprietary firms engaged in transporting tractors for a manufacturer from the factory to dealers' premises. The revenue sought to classify these transportation services as 'Manpower Recruitment or Supply Agency Services' and raised service tax demands. The Commissioner (Appeals) confirmed the demand, leading to the present appeals.

Findings of Court:
The Tribunal examined the contract terms, finding that payment was based on a per-kilometer rate and the appellant assumed full responsibility for the goods, which is inconsistent with manpower supply services. The demand was set aside, but a penalty of Rs. 10,000 was imposed on each appellant under Section 77 for failure to register.

Issues: Whether the transportation of tractors constitutes 'Manpower Recruitment or Supply Agency Services' under the Finance Act, 1994.

Ratio Decidendi: If a contract involves job-specific work with consideration based on output (per kilometer) rather than the number of personnel supplied, it does not qualify as 'Manpower Recruitment or Supply Agency Services'.

Result: Appeals partially allowed.

Table of Content
1. factual background of the dispute regarding service tax classification. (Para 1 , 2)
2. arguments regarding the nature of transportation contracts versus manpower supply. (Para 4 , 5)
3. contract conditions determining whether service is for manpower supply. (Para 6)
4. penalty for non-registration despite absence of substantive service tax liability. (Para 7 , 8)

DATE OF HEARING: 28.11.2025

DATE OF DECISION: 27.03.2026

S. S. GARG :

These two appeals are directed against two impugned Order-in Appeal Nos. CHD-EXCUS-001-APP-140-2018-19 dated 06.07.2018 and CHD-EXCUS-001-APP-241-2018 dated 19.12.2018, passed by the Commissioner (Appeals) CGST, Chandigarh, whereby the learned Commissioner (Appeals) has confirmed the demand of service tax but has not quantified the interest and penalty. Details of appeals are as under in a tabular form:

Appeal No. & Appellant	ST/61727/2018 (Kamaldeep Enterprises)	ST/60335/2019 (Syal And Associates)
Issue	Demand of service tax on transportation of tractors by road, under the category of Manpower Recruitment or Supply Agency Services	Demand of service tax on transportation of tractors by road, under the category of Manpower Recruitment or Supply Agency Services
Relevant Period	April 2010 to Sept 2011	April 2010 to Sept 2011
OIA	CHD-EXCUS-001-APP-140-2018-19 dated 06.07.2018	CHD-EXCUS-001-APP-241-2018 dated 19.12.2018
OIO	24/ST/JC(P)C/CHD-I/2012-13 dated 29.11.2012	25/ST/JC(P)C/CHD-I/2012-13 dated 29.11.2012
SCN	C.No. V(ST)SCN/JC(P)/Adj/CHD I/65/11/4128 dated 21.10.2011	C.No. V(ST)SCN/JC(P)/Adj/CHD I/66/11/4125 dated 21.10.2011
Demand of Service Tax	Rs.17,98,864/- u/s 73 of the Finance Act, 1994	Rs.20,85,358/- u/s 73 of the Finance Act, 1994
Interest	Not quantified, in terms of Section 75 of the Act	Not quantified, in terms of Section 75 of the Act
Penalty	Not quantified, in terms of Sections 76 & 77 of the Act	Not quantified, in terms of Sections 76 & 77 of the Act

1.2 Since the issue involved in these two appeals is identical, therefore, both the appeals are taken up together for discussion and decision. For the sake of convenience, facts of Appeal No. ST/61727/2018 are taken up.

2. Briefly stated facts of the present case are that the Appellant, M/s Kamaldeep Enterprises, are a proprietary firm engaged in the business of transportation of tractors. They mainly transport tractors manufactured by M/s Punjab Tractors Ltd (‘M/s PTL’) (Now known as M/s Mahindra Logistics) from their factory to different dealer’s premises by driving the same under an agreement dated 02.01.2004 entered into between the Appellant and M/s PTL. During the audit of M/s PTL, it was noticed that M/s PTL had made payments to the Appellant towards outward freight for delivery of tractors to different depots/locations. Thereafter, enquiries were initiated and the records of the Appellant were called for. After completion of the investigation, show cause notice was issued to the Appellant alleging that services provided by the Appellant to M/s PTL fall under the category of ‘Manpower Recruitment or Supply Agency Services’ and proposing demand of service tax along with interest and penalty. After following the due process, the Adjudicating Authority, vide Order-in-Original, confirmed the demand. Aggrieved by the said Order-in-Original, the Appellant filed appeal before the Commissioner (Appeals), who vide the impugned Order-in-Appeal, has rejected their appeal. Hence the present appeals.

3. Heard both parties and perused the material on record.

4. The learned Counsel appearing for the Appellants submits that the impugned orders are not sustainable in law as the same have been passed without properly appreciating the facts & the law and the binding judicial precedents on identical issue.

4.1 The learned Counsel further submits that the issue involved in the present case is no more res integra and stands settled by this Tribunal in Appellants’ own case titled as M/s Syal & Associates and M/s Kamaldeep E

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2026 Supreme(Online)(CESTAT) 508

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNALS. S. Garg, Judicial Member, P. Anjani Kumar, Technical MemberKamaldeep Enterprises – AppellantVersusCommissioner Of Central Goods & Service Tax – RespondentService Tax Appeal No. 61727 of 2018 | Service Tax Appeal No. 60335 of 2019

Transportation services provided under a contract that is job-specific and remunerated on a per-kilometer basis, where the service provider retains full operational responsibility, do not fall within the definition of 'Manpower Recruitment or Supply Agency Services' under the Finance Act, 1994.

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
S. S. Garg, Judicial Member, P. Anjani Kumar, Technical Member
Kamaldeep Enterprises – Appellant
Versus
Commissioner Of Central Goods & Service Tax – Respondent
Service Tax Appeal No. 61727 of 2018 | Service Tax Appeal No. 60335 of 2019