9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (1) TMI 336 - AAR - GSTClassification of service - Pure agent or service provider - applicable rate of tax - applicant is a service provider and intends to work as a Pure Agent for a company which will be the recipient of the labour supply services - HELD THAT - The applicant has entered into an agreement with the company for supply of labour and in the clause Description of Work of the agreement, it is clearly mentioned that, contractor shall supply labour in each shift (All the three) as per the requirement of the organization; contractor shall be paid at 17000.00 on the total bill raised by him for each worker supplied by him per day and the labour employed by the contractor 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. The applicant does not satisfy any one of the conditions mentioned in the Rule 33 of CGST Rules, 2017 which are required for acting as a pure agent . Hence we conclude that the applicant cannot be categorized as a pure agent as such he is engaged in the supply of labour service. The supply of labour service is taxable under GST Act/Rules, therefore applicant is liable to pay Goods and Service Tax on the supply of said service provided. Classification of service - applicable rate of GST for service of supply of labour - HELD THAT - The nature of service provided by the application is covered under the Service Accounting Code 998519 - Other employment and labour supply services nowhere else classified - The Service provided by the applicant merit classification under SAC 998519 and applicable rate of GST would be covered under entry No. 23 of Notification No. 11/2017. Accordingly, applicable rate of GST for the Service provided by the applicant would be 18% in terms of Sr. No. 23 of Notification No. 11/2017-CT (Rate) dated 28.06.2017.
Issues Involved:
1. Determination of the applicable GST rate for the activity carried out by the applicant. 2. Whether the applicant qualifies as a "pure agent" under the CGST Act/Rules. Detailed Analysis: 1. Determination of the Applicable GST Rate: The applicant, a proprietorship company, sought an advance ruling to determine the applicable GST rate for the activity of supplying labor services. The applicant intends to work as a pure agent for a company that will be the recipient of the labor supply services. The company authorizes the applicant to make payments to third parties (labor) on its behalf, and the applicant issues two types of invoices: one for reimbursement of salary payments made to labor and another for service and consultation fees. 2. Whether the Applicant Qualifies as a "Pure Agent": The core issue is to determine if the applicant qualifies as a "pure agent" under the CGST Act/Rules. To address this, the Authority for Advance Ruling referred to Section 15 of the CGST Act, 2017, which defines the value of taxable supply, and Rule 33 of the CGST Rules, 2017, which outlines the conditions for a supplier to be considered a pure agent. As per Rule 33, a pure agent is defined as a person who: - Acts as a pure agent of the recipient of the supply when making payments to third parties on authorization by such recipient. - Separately indicates the payment made on behalf of the recipient in the invoice issued. - Procures services in addition to those supplied on his own account. The applicant's agreement with the company and the invoices submitted were scrutinized. The agreement titled "AGREEMENT FOR LABOUR CONTRACT" specifies that the contractor (applicant) shall supply labor as per the company's requirements and be paid accordingly. The contractor is responsible for complying with various labor laws and indemnifying the company against any claims. Findings: - The applicant does not satisfy the conditions mentioned in Rule 33 of the CGST Rules, 2017, required for acting as a "pure agent." - The applicant is engaged in the supply of labor service, which is taxable under the GST Act/Rules. - The service provided by the applicant falls under Service Accounting Code 998519 - Other employment and labor supply services nowhere else classified. Applicable GST Rate: The applicable GST rate for the service of supplying labor is determined by referring to Notification No. 11/2017-Central Tax (Rate) dated 28-6-2017. The relevant entry is Sr. No. 23, which specifies a GST rate of 18% (CGST-9% + SGST-9%) for support services, including labor supply services. Ruling: Question: What will be the applicable GST rate for the activity carried out by the applicant? Answer: The applicable GST rate for the activity carried out by the applicant, i.e., supply of labor, is 18% (CGST-9% + SGST-9%) in terms of Sr. No. 23 of Notification No. 11/2017-CT (Rate) dated 28.06.2017.
|
