Man power supply services
This query is : Resolved
09 December 2013
Sir,
The service receiver is hereby refered asCompany and the Man Power Supplier is refered as Consultant.
Now, the Company has received Man Power Supply Services from the Consultant and agreed to pay Rs. 1000 per person per month to consultant.
The Labours employed are enrolled on the Payroll of Consultant and are receiving Salary Rs. 4000/- pm.
The Consultant Charges in his bill Rs 1,00,000 towards salary and 25000 as his Service Charges and charges Service Tax on total value, ie. 1,25,000/-
It is noteworthy that the Consultant is only responsible for providing Labours and it is the Company who has the sole discretion on how the same are to be employed. Further, it is ensured that the Labours are actually paid the same amount as the Consultant Charges in his bill so there is no scope of inclusion of service charges in Salary.
Whether the same is tenable or the tax should be charged on the Value of Service Charges alone.
Please Clarify with appropraite literature or notification if any
The service receiver is hereby refered asCompany and the Man Power Supplier is refered as Consultant.
Now, the Company has received Man Power Supply Services from the Consultant and agreed to pay Rs. 1000 per person per month to consultant.
The Labours employed are enrolled on the Payroll of Consultant and are receiving Salary Rs. 4000/- pm.
The Consultant Charges in his bill Rs 1,00,000 towards salary and 25000 as his Service Charges and charges Service Tax on total value, ie. 1,25,000/-
It is noteworthy that the Consultant is only responsible for providing Labours and it is the Company who has the sole discretion on how the same are to be employed. Further, it is ensured that the Labours are actually paid the same amount as the Consultant Charges in his bill so there is no scope of inclusion of service charges in Salary.
Whether the same is tenable or the tax should be charged on the Value of Service Charges alone.
Please Clarify with appropraite literature or notification if any
09 December 2013
You have to pay service tax on the entire amount of services i.e. salary plus charges.
Please also note that you are (Company) is also liable to pay 75% service tax as per reverse machanism introduced by Govt rest 25% is payable by contractor.
Please also note that you are (Company) is also liable to pay 75% service tax as per reverse machanism introduced by Govt rest 25% is payable by contractor.
09 December 2013
Suren,
You have replied that the Tax has to be paid on whole amount but please provide the basis of your conclusion. Why cant I treat the Consultant as a pure agent who is reimbursing the labours on our behalf. If you think that as the labours are in the Payroll of Consultant, the Whole amount should be charged, then I would like to state that definately somwhere they will be enrolled on payroll otherwise we cannot imagine a Man Power Supply Service. Now , The service received from The Consultant is wholly different from what we know as work contract for the reason of absolute control of Company.
Further, Just as the Consultant is a Man Power Supplier, it does not ignite the gun of Reverse Charge. We should see the Status of such Supplier. In the given case It is a Private Company and hence reverse charge mechanism do not applies.
You have replied that the Tax has to be paid on whole amount but please provide the basis of your conclusion. Why cant I treat the Consultant as a pure agent who is reimbursing the labours on our behalf. If you think that as the labours are in the Payroll of Consultant, the Whole amount should be charged, then I would like to state that definately somwhere they will be enrolled on payroll otherwise we cannot imagine a Man Power Supply Service. Now , The service received from The Consultant is wholly different from what we know as work contract for the reason of absolute control of Company.
Further, Just as the Consultant is a Man Power Supplier, it does not ignite the gun of Reverse Charge. We should see the Status of such Supplier. In the given case It is a Private Company and hence reverse charge mechanism do not applies.
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