22 April 2015
sir, a milk products factory is receiving services from labour contractors for supply of manpower to do packing services, loading and unloading services, cleaning tubs. payment to them will be made on the basis of work executed to some contractors and on basis of labour supplied to other contractors.
whether the above services are taxable or not and is there any liability under reverse charge mechanism (factory is registered under mutually aided cooperative societies act)?
if taxable under which head it will be taxable (manpower supply or job works operation or any other services)
or whether those services are exempt under negative list(any process amounting to manufacture or production of goods) or not ?
Reverse charge is applicable only when service receiver is business entity registered as ‘body corporate’.
As per Rule 2(bc) of Service Tax Rules, 1994, “body corporate” has the meaning assigned to it in clause (7) of section 2 of the Companies Act, 1956. .
(7) "body corporate" or "corporation" includes a company incorporated outside India but does not include— (a) a corporation sole; (b) a co-operative society registered under any law relating to co-operative societies; and (c) any other body corporate (not being a company as defined in this Act), which the Central Government may, by notification in the Official Gazette, specify in this behalf;
Therefore the reverse charge mechanism is not applicable to Co-operative society.
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