Categorisation of Service - Manpower or Cargo Handling service?

[Jagadeeswara Rao]

Hi every body,

i am new to this forum and thak to all who are sharing their valuable and good views in this forum to help so many are having doubts and awaiting clarifications.

I have a query on payment of service tax,

We are one of the manufacturing company located in Andhra pradesh and rendering services from service providers, providing man power, for the following works !

loading, unloading and shifting of raw materials and finished goods,

machinery operating, making pallets,

packing and house keeping etc.

for some services our contract is under supply of man power and some services our contract is under piece rate.

both services providing by same contractor.

In this case, please clarify me, which service is covered under reverse charge mehanism or all the services are covered under reverse charge mechanism, since the service provider is billing as under;

1.  bills for loading and unloading charges for the mont of .....       1000 tons @ Rs. 30/-         -    Rs. 3,00,000/-

                                         ST @ 12.36%                                                                                          Rs.    37,080/-

 

2.   Bill for loading and unloading, house keeping charges for

      the month of ..............                                                              

       Workers                                                                  250 man days    Rs. 240/- per day          Rs. 6,00,000/-

                                         ST @ 12.36% (25% of Total ST)                                                           Rs.     18,540/-

in option 2 giving a note in the bill as below

75% of total ST payable by Service receiver as per the Service tax notification no. 30/2012-ST dated 20.06.2012.

Please confirm, whether the above is correct or not?

Thanks in advance for immediate action in this regard,

Jagadish. R

       

 

[JAMES PG]

When the contract provides for unloading/loading and the amount fixed is Rs 30 per ton, it may not fall under the category of Manpower supply. The logic behind this is that you are paying not for the number of people deployed but for the tonnage handled. Contract is for handling the cargo and the service provider is at liberty to deploy men or machines to render the service. Whatever be, the payment is restricted to Rs 30/Ton.

In the case of Loading,house keeping etc, where the modality of payment is mandays, it will definitely fall under manpower supply.

 

[Jagadeeswara Rao]

Hi Mr. James,

Thank you for your clarification,

however, please confirm whether our contractors giving bills in correct way or not, as per the details given in my query. Please suggest changes required, if any.

Jagadish.

[JAMES PG]

In  the case of manpower supply, it is preferable to show the ST payable by the service receiver also so as to comply with the conditions of Rule 4A  of ST rules. which provides that the Invoice shall contain the amount of "Service Tax payable". ST payable would imply payable both by Service provider and receiver

AI Summary

Manpower supply classification: piece-rate cargo contracts treated as cargo handling, manday contracts as manpower supply requiring reverse-charge disclosure. Contracts charged on a fixed unit-of-cargo basis are treated as cargo handling service because payment is tied to tonnage and the provider may use men or machines; manday-based billing constitutes manpower supply and falls under the manpower-supply regulatory treatment, including reverse-charge implications. For manpower-supply invoices it is recommended to state the amount of service tax payable on the invoice to reflect tax payable by both provider and receiver under the reverse-charge framework.