Liability of the principal employer

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Maitree (Querist)
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27 February 2016 Dear All,

I have 2 queries, kindly read them below carefully and guide me that what shall be the liability of the principal employer in both the cases under Service Tax:

1. If a firm employs a vendor who provides labour services (as in labour for construction purposes) and the vendor is not registered under Service Tax OR does not charge Service Tax in the Invoice, then what shall be the consequences or the liability of the principal employer, employing such a vendor, under Service Tax

2. If a company hires a single vendor who provides both labour as well as material but raises separate invoice for labour and separate invoice for material, then will this provision be covered under works contract or not, for merely raising separate invoices?

Neljo Davis ACA

Neljo Davis ACA (Expert)
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04 March 2016 Query 1: In the case of supply of manpower, reverse charge is applicable only if, services are provided by an individual, Hindu Undivided Family or partnership firm, to a business entity registered as a body corporate. Hence no service tax liability.

Query 2: Merely raising separate Invoices will not change the character of a contract. But if the assessee maintains separate agreements for supply of material and labour contract, then the provisions of works contract will not apply.

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