There is very thin layer between “Business Auxiliary Service” and “Manpower Supply” services when provided by Service Provider at Place of Service Receiver. Even if service tax is being paid, though there is no revenue loss, but there is basic difference in payment mechanism i.e. for Manpower Supply, when provided by Individual/Proprietor /Partnership firm to Body Corporate, there is Partial Reverse Charge Mechanism. So, the aspect whether Service Provider has crossed Threshold limit of Rs. 10 lakh becomes insignificant and Service Receiver(Body Corporate) has to pay Partial Service Tax on value of service received. So, Department always try to establish that service provided is Manpower Supply and not “Business Auxiliary Service”. So, due care is required while considering correct classification of service.
There are various judgments wherein it is held that if contract/invoice prepared for service on the basis of quantum of work, it is “Business Auxiliary Service” and if on basis of humane time basis i.e. per day/hours etc, the same is Manpower Supply. However, it is not appears as enough criteria as valuation may be colorable device and other terms of contract also required to be considered.
In Manpower, the action is to provide Manpower of required number to work under direction of Service Receiver. There may be specific requisition of particular class i.e. age, education, experience etc, however other aspects viz. Time Frame, Quality of Work, Penal Provision failure time frame etc are absent. In case Manpower provided are not working properly, it may be changed for subsequent period.
Whereas in “Business Auxiliary Service”, Service provider is supposed to undertake particular job with various aspects i.e. time frame, quality of work etc and in case of failure in time frame or quality of work, there may be penal provision also. In this job, aspects viz. numbers, age, experience, education etc. of manpower has no much significance but limited to the extent that quality and time frame of work are not damaged.
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