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Labour contractor-category of service ??

CA Abhishek Singh (practice) (2105 Points)

04 June 2013

Hello everyone,

one of my client is doing job work. material is supplied by client and his labourers are working in the premises of the clients. machinery is also provided by the clients. he raises bill only for labour charges.

i am applying for service tax registration and confused regarding classification of category of taxable service ?

waiting for the views of the experts.

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4 Replies

Nirav Worah (CHARTERED ACCOUNTANT) (396 Points)
Replied 04 June 2013

To determine the applicability of service under manpower supply service following condition should be fulfilled

a) service provider should work under expertise, supervision, direction and control of service receiver.

And,If the service provider uses his own expertise or exercises his own control for providing service it will not be covered under Manpower Supply Service.

Production or processing on behalf of client is covered under business auxiliary service subject to exemption given under Notification No. 25/2012. "Exemption is given to any intermediate production process as job work in relation to any goods on which appropriate duty is payable by the principal manufacturer.

might be covered under above two services depending on the facts:

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CA Abhishek Singh (practice) (2105 Points)
Replied 04 June 2013

thanks nirav.

suppose a company located in mumbai needs some worker for doing some work then my client will send say workers to their place and my client will also supervise the work done by the workers.

Nirav Worah (CHARTERED ACCOUNTANT) (396 Points)
Replied 04 June 2013

It will not be manpower supply service as labours are working under the supervision of the service provider and not under service receiver. It might be covered under other services depending on the nature of work performed.

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Justin (MBA) (21 Points)
Replied 05 June 2013

I signed a large training contract with a well known firm. This project is to be rolled over pan india. To make it cost effective I subcontracted some of the training to individual free lance trainers and to couple of small training outfits.

I raise invoice for the services with 12.3% service tax. Now the trainers\small training outfit feels that they need to raise service tax and they need to pay the government.

Now my query Who pays the service tax?

1. I need to pay

2. Everyone needs to pay?

Please note as far as the client is concerned I am the principle vendor. If everyone has to pay then I will be end up paying from my pocket

Can someone help?

Thanks

rgds

Justin