Service tax on wages

Plaese provide the whole structure of payment. Who is paying the salary, Company or manpower agency

I think I should explain the issue. 

Our client has a contract with a corporate man power supplier to supply 18 labours. now the contract says that my client will pay in consideration a certain amount say for example Rs. 100 per month per head as service charges. Now the labours provide are unskilled & semiskilled at the place of operation where the labours so provided works under the supervision of Clients own staff. Further, the client has the right to reject the labours if seems non eligible for work. Such exclusive control of our client definately makes this arrangement out of the scope of work contract.

Further, the presence of labours are recorded by client and intimated to supplier and supplier raise a bill which shows such Wages as Salary as a separate item which is actually paid to the supplier first and the Client verify wheter the exact amount of salary as specifed and raised in the bill of Man Power Supplier is paid to Labourers after statutory deductions. This is the one part of the invoice.

In the other part , The Man power Supplier shows the Service Charges as 18 x 100 = 1800 as its service charges in relation to its supply of Man Power.

Now the question is, whether the Whole Amount will become the value of Service received or only the amount of service charges? Whether the payment on account of Wages will form part of reimbursements?

If we look at valuation rules, sec .67 specifices,"Gross Amount Charged For Service"

Now Service is Manpower Service for Which Manpower supplier is charging salary and other charges.

In my Opinion , the whole amount should be charged to Service Tax.

Refernece can be made to CESTAT judgement in which Provident Fund also forms part of consideration for service of man power.

Hence Agreed amount for service will form part of consideration.

It's a good question