A body corporate has entered into a pure labour contract with a propritorship firm (without supply of material) for the construction of a complex and the payment for that was made on the basis of work done on Sq. Ft. basis. Under which service tax head the service provider will be covered whether under Works Contract or Manpower Supply Services or any other Service Tax head ?
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Service tax on labour contractor
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The decision in this case needs to be taken on the basis of whether or not the manpower so supplied are under the effective control of person to whom they are so supplied. There is a draft circular issued by CBEC in August 2012, which deals with this issue specifically.
Given that the payment is made on per sq. ft basis, it appears that there is no such control by the body corporate on the manpower supplied by the proprietor. Hence, based on the facts, this does not constitute supply of manpower.
Moreover, given that there is no supply of material, this is not a works contract service.
Hence, it is preferable to consider the classification of "Maintenance or repair" or any other head relevant to the service provided, other than Works Contract services and Manpower supply services.
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