Reverse charge mechanism Labour

[nilesh shinde]

I am (Say A) providing Labour service to some other person (say B) and he add some other charges in their invoice & provide service to Company( KPS Ltd).

Note .I (sayA) provides Labour service occasionally i.e.4-5 time in year. I don’t have Service Tax No. my Turnover is less than 9 lakh.  

Now My(Say A) query is…

1.This service may fall under Supply of Manpower for any purpose/reason. ?

2.Partial Reverse charge mechanism will be applicable.

3.Whether Service Tax Registration compulsory in my Case? If Yes there is no fixed Place of business then how can apply for S.T. No.?

Pl advise

[dipsang vadhel]

There could be certain contracts in which such manpower is made available to execute another independent contract by the service provider.  For example, a person may agree to carry out construction or a manufacture for another in which certain manpower may be engaged.  As long as such manpower is not placed operationally under the superintendence or control of the recipient, it shall not be a case of manpower supply.

The deciding factor is “whether manpower employed by contractor works under control & superintendence of service receiver or not”.

2. In any case, since your turnover is less then Rs.10 lac, you are not supposed to pay any service Tax.irrespective of fact that services provided by you is under reverse charge mechanism or not.

3. If Manpower supplied by you is placed under control & superintendence of B, then you are providing Manpower service to B.B will be liable to pay service Tax under reverse charge mechanism on value of services provided by you.If Manpower supplied by you is not placed under control & superintendence of B, then B will not be laible to pay service Tax under reverse charge mechanism on value of services provided by you.

4. Since you are not liable to pay any service Tax, you are not required to obtain Service Tax registration.

AI Summary

Reverse charge mechanism for manpower supply: recipient liable where workers are under their control, supplier exempt under turnover threshold. Whether a labour provider's services are treated as manpower supply hinges on whether the supplied workers are placed under the recipient's control and superintendence. If they are, the recipient is liable under the reverse charge mechanism to pay service tax on the value of the service; if they are not, the arrangement is independent contract labour and reverse charge does not apply. Suppliers below the turnover threshold are not required to pay service tax or obtain registration.