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Service tax wrong classification of service in manpower supply but actually it is work contract service

12 January 2016

A company receives a housekeeping service and classify it into the manpower supply of services and paid service tax under the full reverse charge mechanism but I think that housekeeping service should be classified into the work contract because housekeeping agency provide 3 housekeeping workers and 1 supervisor and charge Rs. 20,000/- pm including material. please provide me the best possible solution for my query.

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Arpit verma (Indirect tax) (1372 Points)
Replied 14 January 2016

“works contract” means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property;
As per Rule 2(g) of STR 1994 - “supply of manpower” means supply of manpower, temporarily or otherwise, to another person to work under his superintendence or control.
Services by way of supply of manpower for any purpose or security services.

so as per my view, it should be suppy of manpower and fully reverse charge should be paid by receiver.