Applicability of service tax - manpower agency

[BAL KRISHAN GARG]

Sir, letter sent by sup.of ser.tax 'it has been observed that B took the services for their in house requirement of labour for various manufacturing activities and for which B paid an amount of Rs.6,83,557 /- during 06 - 07 towards labour charges excluding material. Here A has not provided labour but he was doing job of painting the c/fan blades and payment was received only on completion of paints which are ultimately cleared by B after excise duty. B has No supervision or relation with A's labour.dirction to labour not from B but labour done work under A's direction only . B mentioned A as a contractor in Form 16 and in his ledger account as a job charges and also confirm to ass.com. that A is a contractor. Whether Ser.tax Provisions apply under manpower agency? also bill was made on pieces basis and no nexus between no of labour and billing .

[madhavvan n]

based on facts decsribed by you and on comparing the same with the departmental letter the dept does not know the actual ground realities hence these facts have to be clearly brought out in your reply to department and if necessary a visit by dept rep to the factory which would substantiate the fact that this process done by A amounts to job work not amounting to manufacture and further A after completing the job work hands over the product for further processs to manufactuere ie B and there after the end product is cleared by B after payment of excise duty therefore it can be concluded that A is out the service tax net . all these facts have to be clearly brought out in your letter after enclosing all documents purchase order / contract ( which clearly stipulates nature of work)and then lets us see what course it takes. once these facts are on record of the department we are on sound footing that this is job work then even if this goes in litigation you will be on strong wicket with higher authorities

AI Summary

Service tax applicability on manpower supply depends on whether activity qualifies as job work rather than provision of labour services. Taxability depends on whether the contractor performed painting under its own direction and billed per piece while the principal exercised no supervision; documentary evidence (contracts, purchase orders), excise clearance by the principal after receipt, and on-site verification are decisive to establish the activity as job work rather than a manpower supply.