Service tax credit for trading company

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Tapan Kumar Parui (Querist)
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17 November 2012 We are in the business of selling artificial sugar substitute. we have dedicated third party manufacturer from whom we purchase our finished product as per our specification & sell it in market.We have also engaged a manpower recruiting organisation to provide us manpower who are on their payroll but working for us. For every month we are paying to the manpower provider including the service tax on their invoice. My question can we get the credit on the service tax that we are paying for manpower service ?

CA Sahil Singla..

CA Sahil Singla.. (Expert)
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17 November 2012 No service Tax credit since you are a trader not a service provider

Tapan Kumar Parui

Tapan Kumar Parui (Querist)
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17 November 2012 Thanks for your reply.
Does there any way out as per Reverse Charge Mechanism of Service Tax ?
Also invoice from manpower agency include two element one for salary of contract employees & another for service charge of agency, does service tax will be charged on both the elements or only on service charge?

Tapan Kumar Parui

Tapan Kumar Parui (Querist)
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17 November 2012 Also to mention that status of my manpower supplier is company

CA Sahil Singla..

CA Sahil Singla.. (Expert)
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17 November 2012 Sir

In case manpower supplier is a company, then reverse charge mechanism does not apply to you. SO, you just need to pay service tax mentioned in his Bill.
And yes, service tax will be applicable on both the elements bcoz here the concept of pure agent not applicable

Tapan Kumar Parui

Tapan Kumar Parui (Querist)
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19 November 2012 Thanks for your advice

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