Labour supply vs job work

[BAL KRISHAN GARG]

X IS DOING JOB WORK ON PIECE RATE BASIS ON MATERIAL PROVIDED BY Y IN Y'S PREMISES ALONGWITH HIS LABOUR.DISPUTE ARISE MANPOWER'SAGENCY IN SER.TAX AND THE AC OF DIVISION HAD MADE THE NECESSARY ENQUIRY INCLUDING DOCUMENTS AND THE CASE FIGHT IN AC'S OFFICE AND HE CONCLUDED THAT X IS NOT PROVIDING LABOUR TO Y BUT X IS DOING JOB WORK.THIS FINDING HE HAS FORWARDED TO HIS REPORTING AUTHORITY . NOW THE SUPRINDENT OF THE DIVISION HAS ASKED ME TO MEET WITH THE AUDIT PARTY IN THE HEADQUARTER AND ADVISE TO SETTLE THE CASE AT AUDITOR'S LEVEL. MY QUERY IS WHEN THE CONCERNED AUTHORITY HAVE COMPLETELY MADE ENQUIRY IN THE CASE AND HE HAS FORWARDED HIS FINDINGS TO THE AUTHORITY CONCERNED IS THERE ANY NEED TO APPROACH TO THE AUDIT PARTY FOR THE SETTLEMENT. WHETHER AUDIT PARTY HAS MORE POWER PARTICULAR IN THE CASE WHEN AC HAS MADE ALL ENQUIRY INCLUDING MY PRESENCE AS A LEGAL CONSULTANT FOR THE CLIENT. I HAVE SUBMITTED ALL THE RELATED DOCUMENTS IN WHICH I CAN PROVE THAT IT IS NOT A LABOUR SUPPLY CASE BUT IT IS SIMPLE A JOB WORK CASE AND HE ACCEPTED MY PLEA. ALTHOUGH HIS FINDING HAS NOT COMMUNICATED TO ME IN WRITING BUT I HAVE SEEN THE LETTER WHICH HE WRITTEN IN WHICH HE ACCETPED ME PLEA . CAN ANYBODY BE CORRECT APPROACH SO I CAN PROCEEDS FURTHER. THANKS TO ALL B.K.GARG

[Rama Krishana]

It is an attempt of the central excise department / service tax department to collect duties or taxes without issues Show Cause Notice (SCN) therefore they are running behind you that some how you would agree to deposit the amount without going into litigation. In this case, when you have already represented before the AC of the Division, you may write a simple letter to the AC with a cc to the audit party and range office that how the matter is being taken up the the audit team resulting into an harassment. You may also send a letter to the commissioner / chief commissioner in this regard. Further, audit party has no power except to recommend the matter to divisional office to issue SCN. Officially they can not force the assessee to deposit service tax on the basis of observation by them.

[BAL KRISHAN GARG]

Respected Rama Krishna Ji , In this regard , I explain you the thing happened. Notices have been issued by concerned AC/Superindent of the division . They asked 3 year's details with documents including bill book,ledger account,confirmation from the party , bank statement , ITR'S etc. and all these documents have been submitted and personal hearing as a consultant before AC of the Division held.They made cross questions to me and further they issue a notice to the service receipent also and he has also submitted all replies . in conclusion , AC of the Division has made his final findings in my favour and report to his authority concerned which i have seen unofficially through superintendent.the case was discussed in details . nearabout 4-5 hearing have been made in these four case . My query is whether after reporting by AC of the Division which is in my favour i should contact to the audit party ? as report has been sent by the AC after all his enquiry and verification of the records and documents submitted . Is there any power on the audit party's hand to reffer the case agains to the Division or some other authority . As a professional I think when the Concerned Authority i.e.AC / Superintendent has accepted my plea why I should approach the audit party . Moreover the receipent has also replied the facts of the case. Thanks a lot Mr. Rama Krishna

[Rama Krishana]

The action of the department is wrong and must be condemned. As I said earlier, in case audit party has any observation, that can send its observation of the concerned department through proper channel. In this case, you just reply and submit the facts firmly and be salient thereafter. Here, the general mistake we do that without a proper notice or summon we reach there office merely on a verbal call to explain our stand. You just insist them to issue necessary letter and notices. Thereafter you need to reply appropriately. This a case of harassment, and I hope some department officials would also be reading these facts and issues. Simultaneously I suggest you not to be panic and worried.

AI Summary

Classification of service as job work versus labour supply affects tax treatment; audit observations cannot compel payment absent formal notice. Dispute over classification as job work versus labour supply: divisional enquiry with documentary verification and hearings concluded the activity is job work and reported in favour of the contractor, while the audit party's later observations can only be transmitted as recommendations through proper channels and cannot compel tax payment without a formal notice; the assessee should insist on written communications and rely on submitted documents and hearings to support the job work classification.