Service Tax for Man Power Supply

[Pon Ramar]

Sir,

Am a Man Power Supplier for Tamilnadu Government departments. I have Annual Turnover of around ₹ 10,00,000 PA. Who will pay the Service Tax? Me(SP) or Tamilnadu Government(SR)?

[KASTURI SETHI]

You will pay ST because Service Receiver is not a business entity body corporate.

Secondly please ensure that you are actually Man Power Supply Agency as per erstwhile definition under Section 65(105)(K) of the Finance Act.

[Ganeshan Kalyani]

I agree with the views of Sri Kasturi Sir. Further the service is not enumerated in exemption notification.

[Himansu Sekhar]

Also the small scale exemption to be considered

[Pon Ramar]

Am Supplying Man Power for Madurai Corporation and Milk Producers Cooperative society. Should i pay Service tax? If i should how much should i pay?

[KASTURI SETHI]

Both are not body corporates. Hence 100% liability of ST on you.

[Pon Ramar]

Sir,

But the Government pays only limited wages for the employees. Still should the Service provider pay 100% Service tax?

[KASTURI SETHI]

No link with limited wages of employees. There is no doubt that liability of ST is cast on you.

[Pon Ramar]

Sir

Till 2012 the service provider should pay 25% and service Receiver should pay 75%. After that according to Reverse charge Service receiver should pay 100%. When did it become 100% for Service provider?

[KASTURI SETHI]

RCM is applicable only when Service Provider is Individual/Partnership/HUF/Proprietorship firm etc. and Service Receiver is business entity registered as Body Corporate. Even now 100% (w.e.f 1.4.15) ST is to be paid by SR if receiver body corporate. In your case SR is not body corporate so 100% liability on SP w.e.f. 1.4.15. Had you provided manpower to Ltd. Company, BSNL etc. they would have to pay 100% ST and NOT you.

You are required to pay ST because you are not eligible for the facility of RCM.

[Pon Ramar]

Am an Individual Labour Contractor (SP) providing Man Power Supply for all Government departments (SR). In such case who should pay the Service tax?

[KASTURI SETHI]

As already explained, Govt. department is not body corporate, so liability is on individual labour contractor.

[Mr Rao]

Dear sir,

As you are providing service to non-body corporates, RCM is not applicable and you being the service provider are liable to pay 100% Servcie tax on the taxable value of services. The views expressed by the experts are absolutely correct and you have to follow accordingly.

[KASTURI SETHI]

Best option is to treat the gross receipts as cum-tax as provided under Section 67 (2) of the Finance Act. Govt. would not pay or reimburse the amount of ST to be borne by you. There is no other any sort of relief in terms of ST law.

[DR.MARIAPPAN GOVINDARAJAN]

For a query lengthy discussions are going on giving a clear picture. Superb.

[Rakesh Chitkara]

Nowhere in the world, experts reveal all. They disclose only barely sufficient for the client yo visit office of expert, pay the fee and get comprehensive advise. Querist here have got full knowledge absolutely FREE. Compliments to experts from me.

[KASTURI SETHI]

Sh.Rakesh Chitkara Sir,. Thanks for recognition and compliments. Recognition from such a highly qualified, talented and knowledgable person is an appreciation certificate for the experts on this forum. Knowledge must be shared otherwise it would rust. All the experts share their knowledge sincerely in the interest of trade and industry. They serve to their best capacity. Credit goes to TMI who has given us such platform.

AI Summary

Service Tax liability on manpower supply: providers must pay when receivers are not body corporates, not under reverse charge.
Supply of manpower to non body corporate government departments and cooperative societies places Service Tax liability on the service provider; the Reverse Charge Mechanism applies only when the receiver is a body corporate. Small scale exemption should be considered, but limited wages paid by the government do not alter tax incidence. Practically, suppliers may treat gross receipts as cum tax under Section 67(2); receivers are not obliged to reimburse the supplier for service tax paid.