Applicability of Reverse Charge to Job work

[Achyut Kale]

Dear Sirs,

If some activity/processing getting done on job work basis (agreed rate per pieace) through contractor. Contractor is placing man power in side the factory to complete the activity. Whether reverse charge mechanism is applicable similar to man power supplier.

Pl comment.

[YAGAY and SUN]

There are judgments of Hon'ble of various Tribunal that if the contractor is providing manpower for providing taxable services on piece rate, then it won't come under the Man Power Recruitment and Supply Services, it would be treated as BAS.

From, 01-07-2012, service tax is charged on almost each and every services (except on Negative List and Services as mentioned in the Mega Exemption Notification dated 20-06-2012), therefore service tax would be applicable.

But if the services fall under the list of 119 specific services, as mentioned in the Circular No 165/16/2012-ST read with Notification No. 48/2012-ST, then, specific code should be mentioned while deposition of service tax.

[Achyut Kale]

Thank you Mr. Pradeep for your valuable inputs.

AI Summary

Reverse charge on job work may apply when contractor supplies manpower for piece rate processing, requiring service tax compliance.
Where a contractor supplies manpower to carry out piece rate job work inside a factory, tribunals have treated that activity as Building And Allied Services rather than Manpower Recruitment and Supply; such services attract service tax and, if they fall within the list of specified taxable services, must be reported and paid using the applicable service code.