Labour bill (reverse charge mechanism)

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hiten (Querist)
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05 December 2012 A company gets electric installation work done. The vendor (individual/partnership) issues only labour bill. Is company liable to pay service tax on labour charges under reverse charge? Will the service falls under works contract or manpower supply or any other category?

As per my understanding since the vendor is charging only for labour, the service will not fall under works contract, since works contract implies supply of material + labour.

Similarily above work is not a contract for supply of manpower but a contract for work, so manpower supply shall also not apply.

Apart from above two cases is company still liable to pay service tax under reverse charge mechanism under any other category?

CA Ravi Kumar Murugesh

CA Ravi Kumar Murugesh (Expert)
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05 December 2012 Electrical installation work means it is a skilled work. as per my understanding, your company will supply everything like electrical items, fittings, lights etc to the contractor and his work is simply to install, thats it.
It is clearly a contract with out supply of any materials by the contractor. If material supply is not there means, clearly it is not a works contract.
He has not supplied any labour for doing your company's work. hence, it is not a labour supply contract.
But, if contractor is issuing labour supply bill then you have to pay serivce tax as per reverse charge mechanism.
If he gives bill for electric installation work, and not claiming any service tax then no need to pay service tax to him.
This type of service is covered under service "Erection, commission and installation service" as per Service tax act.

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