Man power supply

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CA. YASH DILIPBHAI HARIYANI (Querist)
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30 June 2014 sIR WHETHER MAN POWER SUPPLY SERVICES FOR BANKING SERVICES PROVIDED BY SERVICE PROVIDER BE INCLUDED IN bUSINESS aUXILLIARY sERVICES OR WILL BE REGARDED AS A SEPARATE SERVICE?

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Guest (Expert)

30 June 2014 manpower supply services wil b a separate service na

CA. YASH DILIPBHAI HARIYANI

CA. YASH DILIPBHAI HARIYANI (Querist)
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30 June 2014 A service provider is providing services relating to business auxilliary services to various banks ie services relating to systems and other such services where reverse charge is not applicable but the provider is supplying manpower for the same to 2 branches and for this as Reverse charge is applicable he bills to those banks only 3.09% service tax and remaining is paid by receiver He has registered as Business auxilliary service provider so now is he required to classify 2 services one as business aux ser. and 2nd as manpower supply service or no need of classifying it as different?

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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03 August 2024 In the context of Indian service tax laws, particularly under the regime that was in place before the introduction of GST, the classification and treatment of services like manpower supply and business auxiliary services had specific implications. Here’s a detailed explanation addressing your queries:

### **Classification of Services:**

1. **Manpower Supply Services vs. Business Auxiliary Services:**

- **Manpower Supply Services:**
- This service involves providing manpower (workers) to a client, typically to perform specific tasks or roles as per the client's requirements. Under the service tax regime, this was classified under the category of "Manpower Recruitment or Supply Agency Service."

- **Business Auxiliary Services:**
- Business auxiliary services include a range of support services that help businesses with activities such as marketing, sales, and administrative support. This also includes services related to systems and processes, which could be integral to business operations but does not necessarily involve manpower supply.

### **Treatment under Service Tax:**

1. **Reverse Charge Mechanism (RCM):**
- **Manpower Supply Services:** Under the reverse charge mechanism, the recipient of the service (in this case, the bank) is liable to pay the service tax. The service provider invoices the bank for a portion of the service tax (as per the reverse charge mechanism rate), and the remaining service tax is borne by the service recipient.
- **Business Auxiliary Services:** If these services are provided to banks, they are generally not subject to reverse charge unless explicitly mentioned.

### **Classification for Registration and Billing:**

1. **Service Provider’s Registration:**
- If a service provider is registered under "Business Auxiliary Services," they need to ensure that their services fall under this category. If they are also providing manpower supply services, they should ideally have the appropriate classification for each service to comply with service tax regulations.

2. **Billing and Classification:**
- **Manpower Supply Services:** These should be classified separately from business auxiliary services in the service provider’s billing and accounting records.
- **Business Auxiliary Services:** These services should be classified separately in line with the specific nature of the services being provided.

### **Specific Scenario:**

In your case, where the service provider:

- Provides **business auxiliary services** related to systems and processes.
- Also provides **manpower supply services** to banks.

**Recommended Approach:**

1. **Classify Separately:**
- **Manpower Supply Services:** Classify these services under “Manpower Recruitment or Supply Agency Service” and apply the reverse charge mechanism where applicable.
- **Business Auxiliary Services:** Continue to classify these under “Business Auxiliary Services” as per the nature of the service.

2. **Billing:**
- For manpower supply services, ensure the invoice reflects the service tax applicable under the reverse charge mechanism (e.g., 3.09% as per previous service tax rates).
- For business auxiliary services, apply the applicable service tax rate based on the nature of the service provided.

3. **Compliance:**
- Ensure that the service provider's registration and tax filings reflect the correct classification and treatment of each service provided.

**Summary:**

- **Separate Classification:** Manpower supply services should be classified separately from business auxiliary services.
- **Reverse Charge:** Apply reverse charge for manpower supply services where applicable, and classify these services accurately.
- **Billing and Registration:** Ensure your billing reflects the correct service tax rates and classifications.

For compliance with current GST regulations, similar principles apply but with updated rules. Always consult with a tax advisor or legal expert to ensure compliance with the latest regulations and accurate service classification.