Labour Supply

[Pon Ramar]

Sir am a labour contractor supplying labours for the government without material. I receive only minimum wages. Who should pay the service tax for the wages i receive?

[Himansu Sekhar]

Perhaps the issue was discussed in issue id 111832

[KASTURI SETHI]

RCM is not applicable. You are to pay 100 % ST. Govt. is neither a business entity not body corporate.

[Ganeshan Kalyani]

Yes the issue was discussed in detail.

The querist should understand reverse charge is applicable only if the conditions as prescribed in the Notification No. 30/2012-ST as updated from time to time is satisfied. If the condition is satisfied then service provider is not liable to pay tax but the receiver of service shall pay as if he is a service provider. In the situation mentioned by the querist the condition for reverse charge is not satisfied hence reverse charge provision is not applicable so service provider is liable to discharge service tax. Now the proportion of service tax payable by the service provider is what querist is concern about. The querist should understand that Government has prescribed that 15% Service tax (including sbc and kkc) should reach the government kitty. Reverse means the liability of 15% was divided in a proportion that 75% was payable by service receiver and balance 25% payable by provider of service. Now after 01.05.2015 the proportion was set aside and provider of service was relieved from the duty of paying his portion of service tax i.e. 25% tax shall also be paid by service receiver which means service receiver has to pay 100% tax . Now this method is applicable only when the condition of reverse charge is satisfied , as mentioned above. If the condition are not satisfied then service receiver is not at all responsible to share the responsibility of paying some portion of service. Thus service provider is liable to pay 100% tax i.e. 15%. Thanks.

[Ganeshan Kalyani]

Please read 01.04.2015. (In place of 01.05.2015).

[Pon Ramar]

Sir so should i pay the service tax or the government?

[KASTURI SETHI]

Already replied. Why are you not convinced ? If you are not convinced with any reply of the experts, you may engage any advocate or C.A. or some consultant. Law is very much clear.

[Pon Ramar]

Sir am a labour contractor. While supplying labours for Government will there be any exceptions regarding Service Tax

[Ganeshan Kalyani]

You have to pay service tax. There is no exemption.

[KASTURI SETHI]

Dear Querist,. Without going through terms and conditions of the contract, it is not possible to comment.

AI Summary

Reverse charge mechanism not triggered for labour contractor supplying labour to government; service provider liable for service tax. Labour contractors supplying labour without materials to a government entity are liable to pay service tax unless the specific conditions for the reverse charge mechanism are satisfied; if those conditions are not met the government receiver is not responsible to share or discharge the provider's tax obligation, and no exemption was indicated in the presented facts.