CA Abhishek Chopra
Applicability of reverse charge mechanism: Supply of Manpower Vis-à-vis Recruitment of Manpower
Prior to the introduction of negative list under Service tax, which came to effect from 01st July, 2012, service tax was levied on “Manpower Recruitment or Supply Agency services”, under section 65(105)(k) of the Finance Act, 1994. Section 65(105) (k) defined “manpower recruitment or supply agency services” as below:
“taxable service means any service provided or to be provided
(k) to any person, by a manpower recruitment or supply agency in relation to supply or recruitment of manpower, temporarily or otherwise, in any manner”
It can be deduced from the above that supply of manpower as well as recruitment of manpower was covered under the ambit of same definition.
Post introduction of negative list, which became effective from 01st July, 2012, scope of Reverse Charge Mechanism (RCM) was widened vide Notification no. 30/2012-ST dated 20th June, 2012. Under said Notification, entry no. 8 deals with the applicability of reverse charge to supply of manpower, the partial reverse charge mechanism is applicable, inter alia, to services provided or agreed to be provided by way of supply of manpower for any purpose, by any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as a body corporate located in the taxable territory. The said entry was amended vide Notification no. 7/2015-ST dated 01st April, 2015 and supply of manpower services were brought under full RCM.
Further recruitment of manpower is not the Supply of manpower, recruitment is altogether different from supply of manpower. On the basis of above information it can be assumed that only supply of manpower is covered under RCM and no reference regarding recruitment of manpower services is made for purposes of RCM.
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