Respected Colleagues,
We are in Lime minerals business. We purchase limestone, calcine it, process it and make certain chemicals from it. Ours is labor intensive industry. We have given the responsibility of daily production to a contractor. He brings his own labor, which work on our machines and manufacture final products. We pay the contractor on piece rate basis, eg - 500 Rs for one ton of lime produced. We calculate the work done by the contractor and make payment to him accordingly. We are not concerned with the number of labor he employees to get the job done. He may bring 50 labor or 100 labor for the job, it is his look out. We are just concerned with the actual output and calculate our liability accordingly.
My query is, wether this system would come under the scope of Supply of manpower service and attract Service tax on RCM, or it can be classified as Job Work or Business Auxillary Service or any other head ?
Debate on Service Tax Liability for Lime Industry: Is Contractor's Role 'Supply of Manpower' or 'Job Work'? A query was raised regarding service tax liability for a lime industry that uses contractors for production. The main concern was whether the service provided by the contractor falls under 'Supply of Manpower' or another category such as 'Job Work' or 'Business Auxiliary Service.' A consensus emerged that the service does not classify as manpower supply, as the contractor maintains control over the labor. It was suggested that the service could be categorized under 'Other Than Negative List,' making the contractor fully liable for service tax. The discussion also touched on whether the process qualifies as manufacturing, affecting the applicability of excise duty and service tax, especially considering recent legislative changes. The debate highlighted differing interpretations of tax liabilities under current laws, with some participants citing past court decisions regarding excise duties. (AI Summary)
TaxTMI 
TaxTMI 
TaxTMI 
