29 March 2016
Whether RCM is applicable on the Manpower Services provided by the Contaractor at outside the factory ?, As i have a client X to whome i had supplied goods for the structuring & Installation of that good it require the Labour Services & hence i had contacted the Labour services Provider to Provide the Services to MR X , as such sale of goods & Labour services is on my company behalf to MR X, & Such Labour Contractor has raised the labour bill on my company, as one of the Consultant said that the services has been provided outside the factory & hence it is not covered under RCM , as of my view definition is also clear ,that service tax will be levied , what would you say ?
If you have any confusion in the questions then pls let me know .
29 March 2016
"Applicability of reverse charge to supply of manpower, the reverse charge mechanism is applicable, inter alia, to services provided or agreed to be provided by way of supply of manpower for any purpose, by any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as a body corporate located in the taxable territory."
It is not understood, why the contractor issued a bill to you when you were not the recipient of the services. Secondly, are you making the payment on Mr. X's behalf or on your own account. Since you are not the recipient of the service, you are not liable for payment of any tax under RCM. Your books should clearly reveal that the services were rendered to Mr.X's factory and not yours. When the payment is entered the same should be debited to Mr.X by a proper journal entry on the same day as the issue of cheque. It would be still better, if he payment is made directly by Mr.X to the contractor. And since Mr.X is not a ody corporate no service Tax would be payable under RCM.
30 March 2016
Thanks Sir,( MR Suresh Ramaswamy ) , as our client has the product for which it needs to be attached by ancilliary services which is rendered by the contractor outside the company , as majority of the business of the companies is outside the State & hence they need to engage the local contractor to accomplish the sales by providing the said services , & hence it is part of the sales & it bears by the our company ,& hence the Contractor has issued the Bill on our company .not on MR X.
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