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Difference between works contract & manpower supply

James Franklin (IPCC Student) (39 Points)

06 April 2016

our firm has a bagging & loading job work in particular fertilizer manufacturing company. service payment is not on the basis of No. of employees engaged but per ton ( for bagging & loading of fertilizer) . our employees are work in that company under our control & supervision. That company pays service payment on the basis oh how much tones of fertilizer bagged & loaded, and not pays esi & pf for the employees. we pay that esi & pf from our hand. Now under what head we have to charge service tax? whether supply of manpower or works contract? can any one clarify me pls... thanks in advance

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CA Suri Kota (Assistant Manager @ EY) (955 Points)
Replied 06 April 2016

Works contract should involve supply of materials during the job which is not present in your case.

You should treat this as Man power service and basis of charing the fee is not having any relevance !!!!

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James Franklin (IPCC Student) (39 Points)
Replied 07 April 2016

Thank u Mr.Suri Kota for ur reply. But that fertilizer manufacturing company doesn't give employer share of ESI & PF for our employees. We gave that from our hand and our employees are work under our control & supervision. There is no employer & employee relationship between our employees & that company. After completion of finished goods of fertilizer, we bagging, loading & dispatching that fertilizer to the customers of that company (we are the only responsible for the all work we do) and received payment for the work we did on the basis of price per metric ton. so how can it be just a manpower supply. I think manpower supply is just of supply labours to the work and then have no responsibility. pls clarify this. Thank uThank u Mr.Suri Kota for ur reply. But that fertilizer manufacturing company doesn't give employer share of ESI & PF for our employees. We gave that from our hand and our employees are work under our control & supervision. There is no employer & employee relationship between our employees & that company. After completion of finished goods of fertilizer, we bagging, loading & dispatching that fertilizer to the customers of that company (we are the only responsible for the all work we do) and received payment for the work we did on the basis of price per metric ton. so how can it be just a manpower supply. I think manpower supply is just of supply labours to the work and then have no responsibility. pls clarify this. Thank u

Lvrao (Manager (F&A)) (34 Points)
Replied 09 April 2016

Your company will be involved only for bagging the material and it's loading since there is no question of involved in production of the fertilizers. Your company will be raised bill to the manufacturing company for your service charges i.e. bagging and loading and claim the 100% service tax on your service amount which will be remitted to the department.

example:

Your basic service bill Rs. 5,00,000

Add Service Tax % 14.5% Rs. 72,500

Total bill value Rs. 5,72,500

You have to collect Rs. 5,72,500/- from the manufacturing company and remit Rs. 72,500/- to the department.

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