Service tax on manpower supply services

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 September 2013 Service tax on manpower supply services is payable only when manpower works under the supervision and control of actual employer (i.e. service receiver). It means directions are given by service receiver.
Query:
If manpower is supplied by service provider which is supervised and controlled by service provider himself, in that case under which category the service will fall?

Arun Kumar Singh

Arun Kumar Singh (Expert)
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03 September 2013 Yes, Service receiver will pay the service tax under reverse charge systems.

Querist : Anonymous

Querist : Anonymous (Querist)

03 September 2013 Thank You Mr. Arun Kumar Singh for your reply.
But my question is whether the manpower supply agency will fall under the category of Manpower Supply Service in case the manpower is controlled and supervised not by service receiver but by service provider (i.e. agency)

Arun Kumar Singh

Arun Kumar Singh (Expert)
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03 September 2013 Then also recipient will pay the service tax.

Querist : Anonymous

Querist : Anonymous (Querist)

03 September 2013 Dear Mr. Arun Kumar Singh I want the service tax category under which agency will fall when agency (and not the service receiver) controls the manpower supplied by agency. This means the condition of manpower supply agency does not fulfill here. In that case which service should I select for new registration?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 Great question! Here's the clear distinction and answer for your scenario:

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### When manpower is supplied and **controlled/supervised by the service receiver**:

* This is **Manpower Supply Service**.
* The service tax is payable by the **service receiver under Reverse Charge Mechanism (RCM)**.
* The manpower agency just facilitates the supply.

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### When manpower is supplied but **controlled/supervised by the manpower supply agency (service provider)** itself:

* This is **NOT Manpower Supply Service** as per Service Tax law.
* The agency is actually providing a **contractual service** (like contract labour service or labor outsourcing).
* The agency must pay service tax on the **service it provides**.
* **Reverse charge does NOT apply** here because the manpower is not working under the control of the service receiver.

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### So, for your specific query:

* If the manpower supplied works under the control of the **agency itself**, then **manpower supply service does NOT apply**.
* The service provider (agency) should register under **Contract Labour or Labour Outsourcing Service** or a similar category applicable under service tax.
* The service provider has to pay service tax on its gross receipts from this service.
* The service receiver has no service tax liability under reverse charge in this case.

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### Which category should the agency select for registration?

* Register under **“Labour Supply Service”** or **“Contract Labour Services”** (whichever is applicable) but **not as Manpower Supply Service**.
* This is because the manpower is supervised/controlled by the agency, not the client.

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**Summary:**

| Situation | Category | Who Pays Service Tax |
| ------------------------------------------- | ---------------------------------- | ------------------------- |
| Labour works under service receiver control | Manpower Supply Service | Service Receiver (RCM) |
| Labour works under agency control | Contract Labour Service or similar | Service Provider (agency) |

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If you want, I can help find the relevant service tax notifications/rules or draft the registration application category. Just let me know!

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