WORKS CONTRACT SERVICE

[S.C. WADHWA]

Dear Expert,
We are running a factory and have got repaired work of our building from service provider who is not
registered where as we have registered with service tax deptt. His labour bill is for ₹ 75000/- only.
We have supplied the repairing material free of cost.
Now my query is whether we are being recipient of service are liable to pay service tax under reverse
charge and if yes then on which amount. Please give your expert opinion along with notification no.
REGARDS,
WADHWA

[Ganeshan Kalyani]

If your service porovider has provided only service then it will be taxable under forward charge because pure service related to construction is not covered under reverse charge.

However there are so many litigation on the free issue of material supplied to contractor who does incorporate the material in the civil work.

[DR.MARIAPPAN GOVINDARAJAN]

In my opinion, it comes under Man power supply which is liable for the service recipient to pay service tax on reverse charge mechanism.

[Ganeshan Kalyani]

The condition of supervision need to be checked for taxing under manpower supply service.

AI Summary

Reverse charge may apply to recipients where manpower supply is involved; applicability depends on supervision and free issue material treatment. Applicability of reverse charge depends on service characterisation: pure construction/repair services are ordinarily taxed under forward charge, though there is litigation about free issue materials incorporated into work; if the arrangement is a manpower supply, the recipient may be liable under reverse charge, subject to examination of supervision and control facts.