Pure labour contract

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Sonia (Querist)
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29 April 2014 Can Anyone provide me the provision of Pure labour contract service, if the receipient is a limited company and the provider is an individual, where labour works directly under contractor for admin building structural work but invoice raised on company, is there any reverse charge mechanism would apply if yes then what are the rates and if no then provide a clarificatiory provision on the same.

Annu Agarwal

Annu Agarwal (Expert)
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29 April 2014 Dear Sonia,as per my view pure labour contracts woluf fall under the service category of Manpower Supply.
In case of manpower Supply there is reverse charge wherein 25% service tax shall be paid by Service provifder and 75% shall be paid by service receiver provided the following conditions are satisfied:
1.The Service provider is an individual,Partnership Firm,HUf
2.The Service Receiver is a Company

Our case clearly fits for reverse charge.

Sonia

Sonia (Querist)
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29 April 2014 Yes Annu,

Agree with you, but in our case labour will work under the superintendence of appointed contractor for building work and hence what i think it wont b considered as supply of manpower.
Correct me if i am wrong then.

- Sonika

Annu Agarwal

Annu Agarwal (Expert)
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29 April 2014 Well Sonia ,
If we go through the defination of supply of manpower as per Rule 2(g) of service tax Rule it says,
supply of manpower,temporarily or otherwise ,to another person to work under his superintendence or control.
That means to qualify as a manpower supply service the labour should work under the control of Service Receiver i.e. the Company in your case.
So may be we can conclude that the pure labour contract where the control is of Contractor may not fall under manpower supply.

Sonia

Sonia (Querist)
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29 April 2014 i Think u have replied the same twice

Annu Agarwal

Annu Agarwal (Expert)
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29 April 2014 I have replied,please have a look.

Sonia

Sonia (Querist)
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29 April 2014 Thanks Annu,

I got my answer

- Sonika

Annu Agarwal

Annu Agarwal (Expert)
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29 April 2014 Please share your answer,if posible.

Sonia

Sonia (Querist)
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29 April 2014 In our case Service tax liability is on Service provider since its pure Labour contract and hence reverse charge mechanism would not apply.

-- SOnika

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