Colony maintenance Services in a factory

[Guest]

How can the Colony maintenance Services in a Factory be classified?

Currently we have classified as man power Supply and paying Service Tax on RCM basis though the Service provider is an SSP and credit Service Tax paid is not eligible. It becomes cost to the Company.

[KASTURI SETHI]

Maintenance is a pure labour. RCM is not applicable in this activity. This cannot be classified under Manpower. It cannot be classified under the category of WCS also. It is classified under Other Than Negative List or erstwhile BAS. 100 % ST is to be paid by Service Provider. No benefit of RCM to SP and No benefit of abatement.

[KASTURI SETHI]

In continuation of my reply, I further clarify that Manpower is supplied only when labour/Manpower is under the supervision and control of Service Receiver. If labour is under the control of Contractor, then this is under Other than negative list. Now it depends upon the terms and conditions of the agreement executed. If contractor is charging on the basis or work completed, it would not be under Manpower. So pl examine the contract carefully. You may post relevant conditions on forum

[Guest]

Thanq Sir,

The Man power works under the control of the Company i.e., All the Statutory payments were done by the Company and the work will also be allotted by the Company.

The contractor is solely responsible for providing Man power only.

The billing by the Contractor is on Man days.

[Ganeshan Kalyani]

Since the control and supervision of the Labour is with the company the condition of the definition of supply of manpower is fulfilled and thus liable to service tax. If the provider of service is an individual then the company is liable to discharge service tax under reverse charge. Thanks.

[KASTURI SETHI]

I support the views of Sh.Ganeshan Kalyani, an expert.

[Ganeshan Kalyani]

Thanks sir.

AI Summary

Manpower supply: where employer controls labour, reverse charge applies and the service receiver is liable for service tax. Classification depends on who controls the labour: if the contractor controls and charges per work completed the service is an Other Than Negative List service with the service provider liable for tax and no reverse charge or abatement; if the company controls and supervises the labour the arrangement is a Manpower Supply and the service receiver may be liable under the Reverse Charge Mechanism, so the contract's terms (billing on man-days, supervision, statutory payments) must be examined.