s jain (student) 12 December 2013
Reverse charge on cleaning & house keeping contract
Case: M/s ABC Ltd. has employed house-keeping agency M/s TIP-TOP (Proprietor) for cleaning office premise. As per the terms of contract, M/s TIP-TOP is required to clean all furniture and office premises daily. During discussion between M/s ABC Ltd. and M/s TIP-TOP it was agreed that 7 persons will be deployed for carrying out the above job. Each of the person would be paid Rs.10,000/- per month. Thus the total consideration for carrying out the above work is Rs.70,000/- per month. Further it is also decided that, Mr Y will supervise the work of M/S TIP-TOP. M/s ABC Ltd has approached you for advise whether service tax is payable under reverse charge by them and if yes under which category?
Neljo Davis ACA (Consultant) 12 December 2013
If the agreement provides for supply of labour by M/s.TIP TOP to M/s ABC Ltd, the contract will come under “Supply of manpower” (Supply of manpower, temporarily or otherwise, to another person to work under his superintendence or control.) 75% of service tax liability is for service receiver. (Role of Mr.Y is not clear; Is Mr.Y is employee of Ms.TIP TOP or Ms.ABC Ltd, or Independent supervisor?)