pure agent

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CA.Dinesh Bhatu (Querist)
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18 June 2010

please answer me as soon as possible

Suppose company A is a management consultancy firm, there is a mutual agreement between company A and company B that company A will employe persons on its own pay roll and provide it to company B, in turn company B will give to company A all the cost regarding employees and 7.5% service charges on cost. right now company is paying service tax on COST+7.5%, but i am of the view that company A may become pure agent by altering contract and pay service tax only on 7.5%.

At present main clause of contract between company A and B is " Company A is responsible to pay to salayry and all other legal dues of employee and other legal formality"

FACT BEHIND ENTERING IN TO SUCH TRANSACTION

Company B doesn't want to take burden of employee on its own pay roll

My question is

1) Under Which Catagory above service is to be registered?

2) Can company A become pure agent of company B by altering Contract