Self Employed Womens Association vs Cochin-cce

ST/21333/2015



CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 2

Service Tax Appeal No. 21333 of 2015

(Arising out of Order-in-Appeal No. TVM-EXCUS-000-APP-206-14-15
dated 19.02.2015 passed by the Commissioner of Central Excise
(Appeals-III), Cochin.)

M/s. Self Employed Women’s
Association (SEWA)
KRAD 51, Kuthiravattom Road,
Kunnumpuram GPO,
Thiruvananthapuram – 695 001.
Appellant(s)

VERSUS
Commissioner of Central
Excise and Service Tax,
C R Building, I S Press Road,
Kochi – 682 018.
Respondent(s)
APPEARANCE:


Mr. Kurian Thomas, Advocate for the Appellant
Mr. Rajashekar B.N.N., Superintendent (AR) for the Respondent

CORAM:
HON'BLE MR P.A. AUGUSTIAN, MEMBER (JUDICIAL)
HON'BLE MRS R. BHAGYA DEVI, MEMBER (TECHNICAL)

Final Order No. 20991 /2026

DATE OF HEARING: 04.05.2026
DATE OF DECISION: 03.09.2026

PER : P.A. AUGUSTIAN


The issue in the present case is the sustainability of
service tax demand by considering the activity carried out by
the Appellant under manpower recruitment or supply agency
service.

2. Alleging that the activities carried out by the Appellant are
falling under the service tax category, proceedings were initiated
and show cause notice was issued on 27.05.2008 for the period
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from 16.06.2005 to 31.12.2007 and thereafter Adjudication
authority as per Order-in-Original dated 30.09.2009 confirmed
the demand for the period from 01.05.2006 to 31.12.2007 with
interest and dropped the demand for the period from
16.06.2005 to 30.04.2006. Further no penalty was also
imposed. Aggrieved by said order, an appeal was filed before the
Commissioner (Appeals) and Commissioner (Appeals) as per the
impugned order dated 19.02.2015 rejected the appeal.

3. When the appeal came up for hearing, Learned Counsel
draw our attention to the impugned order and the nature of
organization and functioning of the appellant organization would
go on to suggest that the appellant is not in fact acting as a
manpower supply agency. The appellant's main goals are to
organise women workers for full employment. Full employment
means employment whereby workers obtain work security,
income security, food security and social security (at least health
care, child care and shelter). The appellant organises women to
ensure that every family obtains full employment. By self-
reliance it is meant that women should be autonomous and self-
reliant, individually and collectively, both economically and in
terms of their decision-making ability. It is in this context that
the appellant gives training to economically backward women.
The women are part of the appellant. The organisational
structure of the appellant would go on to suggest that it is
essentially in the nature of a trade union organisation, where
the members themselves constitute the organisation. The
organisation would be steered by the executive committee which
consists of the workers themselves, and a secretary. The
members acquire knowledge through the training programmes
organised at the auspices of the organisation. These members
would then go to various customers/clients, and take up
employment. The organizational endorsement by the appellant
would ensure the payment of prompt and correct wages to the
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workers/members, so that chances of exploitation are reduced
to a minimum. The Appellate Authority ought to have considered
these factual aspects while issuing the impugned order. The
Learned Counsel further submits that even after the amendment
of the definition of the services in issue, the appellant
organisation would not fall within the ambit of taxable services.
Since the appellant is not engaged in the rendering of any
service in any manner for the supply of manpower. The
organisation, which itself is the workforce, undertakes various
assignments with the customers. In such circumstances, it
cannot be accepted that the appellant organisation is engaged in
rendering services for supply of manpower. The appellant
submits that what the levy contemplates is a situation where a
person is engaged in the supply of manpower and not a
situation where a person offers himself as a worker
(skilled/unskilled). In other words, no intermediaries are present
in the present case, and hence no manpower supply occurs in
the present case. The Learned Counsel also drew our attention
of the clarification issued by Tax Research Unit vide F. No.
B1/6/2005-TRU dated 27.07.2005, wherein while examining the
scope of the services in respect of the Gem and Jewellery
industry has clarified that where the services of artisans are
directly sought by the organisations or business, without
engaging the services of any other persons in any manner, such
artisans are contractually employed by the organisations or
business. Service tax would be leviable only when the services
of a person are engaged for the recruitment or supply of
artisans. In the present case, the workers unite together and
with this institutional backing they seek direct employment with
the clients. Such a situation cannot be highlighted as a case of
manpower supply, primarily because the workers and the
organisation are not separately identifiable. The Joint
Commissioner, on adjudication of the show cause notice, found
that the appellant is not a commercial concern. As the definition
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of "Manpower Recruitment and Supply Agency" could taken in
only a commercial concern for the periods prior to 01.05.2006,
the Joint Commissioner held that the appellant cannot be
treated as "Manpower Recruitment and Supply Agency" for the
periods prior to 01.05.2006. Consequently, the demand was
limited for the periods from 01.05.2006 to 31.12.2007.
Commissioner also refrained from imposing penalties, on finding
bonafide belief as regards non-taxability and extended the
benefit of Section 80 of the Finance Act, 1994.

4. Learned Counsel also draw our attention to the certificate
issued by as the appellant is falling under Travancore Cochin
Literacy Scientific and Charitable Societies Registration Act.
Further Learned Counsel draw our attention to the Bylaws of the
society and submits that as per the clarification issued by the
Board vide Circular No. 96/7/2007-ST dated 23.08.2007.
010.02/23-8-07 Business or industrial
organisations engage services
of manpower recruitment or
supply agencies for temporary
supply of manpower which is
engaged for a specified period
or for completion of particular
projects or tasks.
In the case of supply of manpower,
individuals are contractually employed by
the manpower recruitment or supply
agency. The agency agrees for use of the
services of an individual, employed by
him, to another person for a
consideration. Employer-employee
relationship in such case exists between
the agency and the individual and not
between the individual and the person
who uses the services of the individual.
Whether service tax is liable on
such services under manpower
recruitment or supply agency's
service [section 65(105)(k)].
Such cases are covered within the scope
of the definition of the taxable service
[section 65(105)(k)] and, since they act
as supply agency, they fall within the
definition of "manpower recruitment or
supply agency" [section 65(68)] and are
liable to service tax.

5. Learned Counsel also draw our attention to the judgment of
Hon’ble Supreme Court in the matter of M/s Joint Commercial
Tax Officers vs Young Men’s India Association & others
and the judgment of the Hon’ble Supreme Court in the matter of
State of West Bengal vs M/s Kolkata Club Ltd 2019 (29)
G.S.T.L. 545 (S.C.) wherein it is held that:

“31. What arises for deliberation now is whether the 46th
Amendment has done away with the principles contained in
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Young Men's Indian Association (supra) and the other
judgments on the doctrine of mutuality, as applied to members'
clubs.
32. It can be seen that the 61st Law Commission Report had
observed that there cannot be said to be any evasion of tax as
a member of members' clubs "really takes his own goods" and,
therefore, did not seek to tax such goods. The framers of the
46th Amendment thought otherwise, and made it plain that
they sought to bring to tax sales made by unincorporated clubs
or an association of persons to their members, as it was
thought that such transactions were not taxable, as such club or
associations in law has no separate existence from that of the
members.
33. Quite obviously, the Statement of Objects and Reasons has
not read the case of Young Men's Indian Association (supra) in
its correct perspective. As has been noticed hereinabove, Young
Men's Indian Association (supra) had three separate appeals
before it, in one of which a company was involved. To state,
therefore, that under the law as it stood on the date of the 46th
Amendment, a sale of goods by a club having a corporate
status to members is taxable, is wholly incorrect. Proceeding on
this incorrect basis, what the 46th Amendment sought to do
was to then bring to tax sales by clubs which have no separate
existence from that of their members. In so doing, the 46th
Amendment used the expression "any unincorporated
association or body of persons". This expression, when read
with the Statement of Objects and Reasons, makes it clear that
it was only clubs which are not in corporate form that were
sought to be brought within the tax net, as it was wrongly
assumed that sale of goods by members' clubs in the corporate
form were taxable. "Any" is the equivalent of "all". This word,
therefore, also lends itself to the aforesaid interpretation, as the
emphasis of the Legislature is on all unincorporated associations
or bodies being brought within sub-clause (e).
34. Thus, it is clear that even going by Shri Dwivedi's eloquent
argument as to the intention of the Legislature, as seen through
the object that the Legislature sought to achieve, would lead to
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the aforesaid expression applying only to clubs which were not
in the corporate form.”

6. Learned Counsel also drew our attention to the statement
showing details of collection and reimbursement expenses as
below:-


7. Learned Authorized Representative (AR) reiterated the
finding in the impugned order and submits that the appellant
had not registered with the department under Service Tax Rules
for payment of service tax. Department on intelligence gathered
by officers of Preventive Unit had booked an offence case for
non registration and non-payment under the service tax
category Manpower recruitment or supply agency service.
Service ibid as per Section 65(68) of the Finance Act, 1994
defines service provider as any person engaged in providing any
service, directly or indirectly, in any manner for recruitment or
supply of manpower, temporarily or otherwise, to a client.
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Recruitment of manpower was introduced with effect from
7.7.1997 and supply of manpower introduced with effect from
16.06.2005. From the nature of the service rendered by the
appellant, it can be rightly construed and classify the same
under Manpower recruitment or supply or agency service. The
appellant contended that they are collecting an annual
membership of Rs. 10/-, an amount of Rs. 300/- from its
members for giving training in cleaning activities and an amount
of Rs. 500/- for giving training in nursing activities. They are
also deducting an amount of Rs. 3/- per day from the wages of
the employee towards employee provident fund and Rs. 5/- from
each member towards the cost of the passbook, Further vide
Board's Circular No. 96/7/2007-ST dated 23.08.2007, in
identical issue, had clarified that in the case of supply of
manpower, individuals are contractually employed by the
manpower recruitment or supply agency. The agency agrees for
use of the services of an individual, employed by him, to
another person for a consideration. Employer-employee
relationship in such case exists between the agency and the
individual and not between the individual and the person who
uses the services of the individual. Such cases are covered
within the scope of the definition of the taxable service and
since they act as supply agency, they fall within the definition of
manpower recruitment or supply agency service and are liable
to service tax. Further the representation of the appellant for
exemption of service tax had been turned down by the Ministry
of Finance vide letter F. No. 332/10/2007-TRU dated 14.09.2007
add to the non eligibility for any exemption from payment of
service tax. Section 67(1) stipulates that in a case where the
provision of service is for a consideration in money, the taxable
value will be the gross amount charged by the service provider
for such service provided or to be provided by him. Regarding
the adoption of taxable value, the appellant's contention that
that the collection and subsequent disbursement of the wages
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are done by the appellant only with the intention of preventing
any exploitation and that the wages do not form part of the cost
of providing the services, if any, and would be excluded from the
wages collected from the clients hence cannot be accepted. Thus
there is no infirmity in the impugned order passed by the lower
authority. The Appellate Authority ought to have found that the
appellant is not rendering any services falling under the
category of 'Manpower Recruitment or Supply Agency Services'.

8. Heard both sides. We find that the appellant organises
women to ensure that every family obtains full employment and
the appellant is not engaged in the rendering of any service in
any manner for the supply of manpower. Further even if is held
that the activity carried out by the appellant amounts to supply
of manpower, as per the evidence available on record,
considerable part of the amount was reimbursed as wages to its
members for providing the service and balance amount charged
as registration fee is negligible and is not falling within the
monetary limit of taxable service. Thus, the adoption of gross
amount for assessing the service tax without deducting the
reimbursable expenses is unsustainable.

9. Accordingly, appeal is allowed with consequential relief if
any in accordance with law.

(Order pronounced in Open Court on ……………………………...)



(P.A. AUGUSTIAN)
MEMBER (JUDICIAL)



(R. BHAGYA DEVI)
MEMBER (TECHNICAL)
Gb/Raja…
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