If labor charges metion separate invoice service tax will attract under RCM

[Guest]

Dear Sir,

If a service provider repair our machine also we purchase the material also.

But the service provider mentioned the purchase item then mention the labor charges in same invoice.

So in this above case service tax will attract under RCM or Not ?

Regards

Swapneswar Muduli

[KASTURI SETHI]

No. First of all it is to be seen whether service is covered under Notification No.30/12-ST dated 20.6.2012. If so, whether service receiver is business entity/corporate body or not ; whether service provider is individual, partnership, HUF, Prop. ?

[Ganeshan Kalyani]

If the material value is shown separately and taxed Vat and labour charges shown separately is taxed with service tax then it will be specified service and not works contract service.

[KASTURI SETHI]

Yes I agree with you, Sir.

[CSSANJAY MALHOTRA]

Agreed with Seniors opinion.

Please make a note that contract should not be bundled and specifically mentions of separate pricing for Material & Labour. Department might make it one if revenue is on higher side, but ultimately at the level of appellate authorities treated as separate for levy of service tax.

[KASTURI SETHI]

Sir,

You have perfected the reply by way of additional information.Thanks, Sir.

[Mahir S]

Yes sir, all the views expressed above are proper and correct and to the point.

However, you may communicate with the service provider to provide separate invoices, if possible.

AI Summary

Service tax reverse charge may not apply where materials are separately invoiced and labour is treated as a specified service. Where invoices separate material value (subject to goods tax) and labour charges, the labour component is treated as a specified service rather than a works contract; applicability of reverse charge depends on coverage under the relevant notification and the service receiver's status. Clear, separate invoicing for material and labour reduces the risk of the department treating the contract as bundled.