Service Tax on reverse charge method - reg.

[vinay wakde]

Our company is owned the Barges/Mini Bulk Carriers to bring the Raw Material & sale of finished goods through sea route.  The crew members & Master for the Barges /MBCs are provided by private limited shipping company   as per Manning contract. The shipping company is providing the service under service category “Ship Management Service”.

Kindly advise us  whether  the service provided by shipping company will be correctly falls under category “Ship Management Service” or as per the nature of the service it will be  interpreted as “Manpower supply” after 01.07.2012 and the service recipient has to pay service tax on reverse charge method.

Regards,

VINAY

[YAGAY andSUN]

It will depend on the scope of work as enumerated in the contract in which you and your service provider is a party.

AI Summary

Reverse charge applies if crew supply is characterised as manpower supply rather than comprehensive ship management services. Whether service tax on crew and master supplied under a manning contract is subject to the reverse charge mechanism turns on classification: if the services constitute Ship Management Service with comprehensive vessel management duties they are treated as ship management, but if they are essentially provision of personnel they will be Manpower Supply, making the service recipient liable under reverse charge; the determinative factor is the contractually defined scope of work and actual services performed.