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.

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.