service tax on manpower supply in case of reverse charge

[bk r]

Being a manufacturer (Partnership Firm) availed manpower services from an individual (not registered) amounting ro ₹ 900000/- during 2016-17. During audit for the period 2015-16 to June 2017 by the central excise department, the audit team pointed out that man power service availed from individual and being partnership firm we have to pay service tax under Reverese Charge. they took a plea that As per Section 2(11) of Company Act, the partnership firm is included in the definition of body corporate. Please clarify.

[Ganeshan Kalyani]

Upto 31.03.2015, the service tax payable by a body corporate on receiving service from an individual. After that the person other than the supplier of the service was liable to pay service tax under reverse.

[Himansu Sekhar]

Still some people have doubt in mind. But there reasoning is not compatible with the present law.

[Himansu Sekhar]

Sorry wrongly posted. Apologize. Ganesh kalyaniji. Kindly elaborate the issue of the queriest with the company act. I can learn something.

[KASTURI SETHI]

W.e.f. 1.4.15 100% liability of Service Tax was cast upon service receiver vide Notification No.7/15-ST dated 1.3.15 (effective from 1.4.15) amending Notification No.30/12-ST dated 20.6.12. Prior to this it was Service Provider 25% and Service Receiver 75%. Here is not the issue of body corporate. Service Receiver will pay ST. The audit objection is correct to this extent.

If partnership firm is LLP, then it is body corporate.

AI Summary

Reverse charge liability for service tax now falls on the service recipient for manpower supply, not the unregistered provider. The notification effective from April, two thousand fifteen shifted full service tax liability to the service receiver under reverse charge; accordingly a recipient procuring manpower services from an unregistered individual must pay the tax. A conventional partnership is not a body corporate, though an LLP is, but that classification does not alter the receiver's obligation under the notification.