Service Tax on Labour Charges

[arjun vyas]

Sir,

Our is LLP firm engaged in iron & steel fabrication work for turnkey projects.

We have engaged one fabrication unit (proprietor) to do some fabrication work, we supply material to them for fabrication [after that we directly transferred that fabricated structure to our turnkey project location]

That unit charges us by giving bill of labour charges only. So the question is whether service tax is chargeable under RCM?

Also if yes, in any case, can we shift the burden of service tax payment on service provider?

Note : All design for fabrication work was provided by us, but all labour work under direction of service provider only.

AI Summary

LLP's Service Tax Obligations Clarified: Reverse Charge Mechanism Applies to Labor Charges in Iron and Steel Fabrication. An LLP engaged in iron and steel fabrication sought advice on whether service tax is applicable under the Reverse Charge Mechanism (RCM) for labor charges billed by a fabrication unit. Responses clarified that an LLP is considered a body corporate under the Limited Liability Partnership Act, 2008, and a partnership firm under the Service Tax Rules, 1994. It was concluded that service tax rules should be followed for payment obligations, with the service provider or receiver responsible for their respective liabilities. An agreement to transfer the entire tax burden between parties is not compliant with service tax laws.