Service Tax on Labour Charges

[Harpreet Singh]

Respected Seniors

I have a query related service tax. Kindly help.

Brief History: We being a Limited Company Received a Bill of Installation of Batteries for Labour charges only. Bill dates back to Feb 2016. Contractor is a partnership firm and has not charged service tax on the bill.

query: whether service tax be applicable under Reverse Charge and if yes how much?

Kindly help.

[SHIVKUMAR SHARMA]

Please refer issue Id 110675

[DR.MARIAPPAN GOVINDARAJAN]

If it is a manpower supply service tax is payable on reverse charge mechanism @ 100%.

[Surender Gupta]

As long as the services are to be classified as Manpower supply, I do fully agree with the views that reverse charge is applicable @100% of service tax liability.

But whether the activity of installation of Batteries would amount to Manpower supply services? Whether mere by stating that charges paid for labor towards installation of Batteries would amount to Manpower supply services?

Assuming that it is a stand alone activity, the answer to the both questions are negative., and therefore, I am of the view that, it will not be a case of manpower supply service and hence provisions of reverse charge will not be applicable in this case.

[Ganeshan Kalyani]

The Labour charges for installation of batteries does not amount to supply of manpower. The nature of service is doing installation job and not supply of Labour to receiver of service to work under his supervision and control. Since the case is not that of supply of Labour it does not fall under reverse charge.

The service provider is supposed to charge full service tax on bill provided his turnover is above SSI limit. Thanks.

[Ganeshan Kalyani]

To add to my previous reply. The description on invoice matters a lot. The exact nature of service is scrutinised later but first the attention of auditor is upon the type of service written on invoice. This if it is pure Labour charge then insist the service provider to write it appropriately. This avoids lot of issue which may creep up later. Thanks.

[YAGAY andSUN]

such service may come under purview of Commissioning and installation agency services.

[Harpreet Singh]

Thanks for replying.

Vendor has mentioned Labour Charges on the bill.

Does the intention of the contractee matters? what if work has been done on the specifications of contractee?

[Ganeshan Kalyani]

No there is no provision to clarify the intention. It simply states that if only Labour charges is included in the bill then service tax shall be under specific head. If both material and Labour then it will fall under works contract.

AI Summary

Service tax reverse charge on manpower supply may not apply to standalone installation labour; classification hinges on invoice description. Whether service tax on labour charges for battery installation is subject to reverse charge depends on classification: if the activity is Manpower supply (personnel supplied to work under recipient's control), reverse charge applies; if it is an independent installation/commissioning service performed under contractor supervision, it is not manpower supply and reverse charge does not arise. Invoice description materially affects classification and consequent tax treatment.