Service tax

Originally posted by : Aditi A. Jagdale
	we are service provider. To one entity we are providing care taking service at the corporate office for which we provide them 3 Nos Office Assistant for daily office routine work + 1 pantry Asst. to serve tea / coffee / lunch etc. and 1 housekeeping assistant. besides we have to give them material for housekeeping for cleaning purpose. plz let me know the service tax / VAT applicability.

Liability of service tax & VAT depends on how billing is done. If charges for services offered and material sold are mentioned seperately, then service tax has to be charged on charges for services & VAT will be charged on sale of material. 
In case, such distinction is not made, principle of dominant nature will be applied. In your case, since the material is provided for the purpose of housekeeping service, dominant nature is of service & therefore service tax shall be charged on full amount. 

Your transaction could be liable under man power supply services. (Can not confirm without analysing terms of agreement) In such case, If your an Individual/HUF/Firm  and the receiver of service is a business entity registered as a body corporate then, the entire ST liability would be on Service receiver. (Ref 30/2012-ST). Or else you would be required to pay ST once you cross small service provider exemption thershold of 10 Lakhs per anum (Ref:33/2012-ST).

Material supplied can be billed separately independent of service.

To call an activity as a Works Contract, there should be TRANSFER of property in goods involved in the execution of contract.

In the above given case, materials are not transferred but CONSUMED while executing the house keeping services. Mere use of consumbales in execution of contract does not amounts to Works Contract.

It can be considered as Man Power Supply services as the effective control/supervion of the Assistants supplied lies with corporate entity.

As rightly put up by Mr Nagendra Hegde, one would have to analyse terms of agreement to derive any conclusion.

The difference between a work and manpower supply is dependent on whether the responsibility for the job is with the service provider or it stops with providing the people. As stated earlier, it would depend on the reality read with the terms of agreement.

If responsibility with the SP then the gross value of the contract would be liable  including the consumables as without that the  wrok cannotbe done. The 10 Lakhs exemptins wouldbe available.

If responsibility for supervision is with the customer, only people supplied then it wouldbe manpower supply and reverse charge couldbe applicable. In this case the supply of goods couldbe exlcuded for which VAT would be liable. Here it wouldbe implied that the consumables woudl be provided by the customer to the labour provided to them.