LABOUR CHARGES

[Mehul Pandya]

In a company there is a contractors who is providing Labour to the company.The worker works under the direction and control of the Company and Company pay the Labour charges to the contractor.

The contractors are only charging labour supply charges from the company without raising any Bill. The Company also deduct PF from the charges and deposit it in its own code.

My question is -

1.Weather the company falls under reverse charge mechanism under Manpower supply services?

Your views are much awaited.

Thank You

AI Summary

Reverse charge on manpower supply applies where contractor provides labour, making the recipient liable to pay service tax.
Full reverse charge applies to manpower supply and security services, making the recipient potentially liable to pay service tax; if workers are truly on the company's payroll and form an employer-employee relationship there is no service. Deduction and deposit of provident fund by the company does not alone prove payroll status. Supervision and control by the recipient is a key factual test to characterise manpower supply. Amounts such as wages, PF and ESIC collected or paid are included in the value of the service for tax purposes.