AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 336
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....e labour supply service procured, as the contract for labour service made by the third parties is between third party and the company that will receive the service; (ii) the company that will receive labour supply service uses the services so procured by the applicant in their capacity as a pure agent of the company receiving the supply; (iii) the company receiving labour supply service is liable to make payment to third parties (labour). (iv) the company authorizes the applicant (pure agent) to make payment on their behalf. (v) the company which is recipient of supply knows that the labour services for which payment has been made by the applicant shall be provided by the third parties (labour); (vi) the payment made by the applicant on behalf of the Company which is recipient of labour supply services has been separately indicated in the invoice issued by the applicant to the recipient of the service; applicant will issue two separate invoices as under : a) Invoice No.1: with description "Bill for reimbursement of Salary payment made on behalf of company to the third parties (labour) for the month as per attached list". ....
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....gent; the company receiving the labor supply service is liable to make payment to the third parties (labor); that the payment will be made by the applicant on behalf of the company to the third party i.e. labor and the same amount has been indicated separately in the Invoice issued by them to the company; that they will issue two types of Invoice 1. Bill for reimbursement of salary payment made to the labour on behalf of the company 2. Bill for service and consultation fees for the month. Accordingly, the moot question before us is to decide whether the applicant covers within the ambit of conditions defined to be a pure agent under CGST Act/ Rules for providing service to the company or otherwise. 7. To answer the said question we need to refer the Section 15 of CGST Act, 2017, vide which value of taxable supply is defined and Rule 33 of CGST Rules, 2017 regarding value of services in case of supply of service as a pure agent Section 15 of CGST Act, 2017 is read as under: Value of taxable supply 15. (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of ....
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....cipient and claims reimbursement (as actual, without adding it to the value of his own supply) for such supplies from the recipient of the main supply. While the relationship between them (provider of service and recipient of service) in respect of the main service is on a principal to principal basis, the relationship between them in respect of other ancillary services is that of a pure agent. The service provider as pure agent can be excluded from the value of taxable service subject to the condition that all the conditions specified in the Rule are satisfied. Further, "pure agent" has been defined to mean a person who : (a) Enters into a contractual agreement with the recipient of service to act as his pure agent to incur expenditure or costs in the course of providing taxable service. (b) Neither intends to hold nor holds any title to the goods or services so procured or provided as pure agent of the recipient of service. (c) Does not use such goods or services so procured, and (d) Receives only the actual amount incurred to procure such goods or services. 7.2 Only when all the four criteria as specified above are satisfied, a per....
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....ractor shall follow the safety norms strictly including prohibiting smoking inside the premises. These terms and conditions clearly indicate that the applicant is engaged in the service of supply of labour. The agreement also provides that the contractor engages all persons in all respects and assumes responsibilities under various Acts, viz. the Factories Act, 1948, The workman's Compensation Act, 1923, Contract Labour (Regulation and Abolition) Act 1970, Employees State Insurance Act and Employees Provident Funds Act, 1952 etc. Further, it also provides that the contractor has indemnified the recipient against all claims and that in the event of the recipient having to pay any amount due to non-observation of the various provisions under the Act, the contractor shall be liable to reimburse the aforesaid amount to the company. 8. Further, we refer the sample copies of the Invoices submitted by the applicant and it is noticed that they have mentioned the particular as "Charges for manpower supply during the month' and charged GST @18% {CGST- 9% + SGST-9%}. 9. In view of the above discussion, it is observed that the applicant does not satisfy any one of the conditions mentione....