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TMI Blog2021 (1) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... an 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 provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... labour) for the month as per attached list . b) Invoice No. 2 : with description Bill for service and consultation for the month (vii) the applicant recover from the company which is recipient of labor supply service only such amount that has been paid by them to the third parties (labour); and (viii) the labour service procured by applicant from the third parties as a pure agent of the company which is recipient of labor supply service are in addition to the services applicant provide on their own account. 3. Accordingly, an applicant sought advance ruling on the following question : What will be the applicable GST rate for the activity carried out by the applicant?. Personal Hearing 4. The authorized representative of the company appeared on behalf of the company and reiterated the submission already made in the application filed with the Authority of Advance Ruling. We the member requested the authorised signatory to submit the copy of contract and Invoice, if any issued in respect of the service provided to the applicant. Findings and Discussion 5. We have considered the submissions made by the Applicant in their application for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply As per Rule 33 of CGST Rules, 2017 the expenditure or cost incurred by a supplier, as a pure agent of the recipient of the supply shall be excluded from the value of supply. However, such exclusion of expenditure incurred as a pure agent is possible where the conditions are required to be considered as a pure agent and further conditions stipulated in the rules are satisfied by the supplier. The relevant rule is reproduced as below Rule 33 of the Central Goods and Services Tax Rules states as under : 33. Value of supply of services in case of pure agent. - Notwithstanding anything contained in the provisions of this Chapter, the expenditure or costs incurred by a supplier as a pure agent of the recipient of supply shall be excluded from the value of supply, if all the following conditions are satisfied, namely :- (i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorization by such recipient; (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered as a pure agent. To decide whether the applicant satisfied all the four conditions we refer the agreement and invoice submitted by the applicant. The relevant extract of the agreement are as under: The heading of the contract is AGREEMNT FOR LABOUR CONTRACT Whereas the contractor being desirous of performing the work of supplying labour to company have submitted the offer and whereas the contractor agreed to perform the duties described the following terms and conditions, now this deed witnessed the parties hereunder do mutually agrees as follows:- DESCRIPTION OF WORK 1. The contractor shall supply labour in each shift (All the three) as per the requirement of the organization. 2. The contractor shall be paid at 17000.00 on the total bill raised by him for each worker supplied by him per day. 3. The labour employed by the contractor shall follow the safety norms strictly including prohibiting smoking inside the premises. 9. SUBLETTING FUNCTION : The contractor shall not sublet or transfer the whole or part of the functions under this agreement to any other person, firm or company without the previous approval of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 10. Now, to decide the applicable rate of GST for service of supply of labour we have to determine the classification of the Service provided by the applicant. Regarding the classification of service Annexure to the Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 have been referred. The Annexure attached to the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 has defined the Service Accounting Code for each type of services, details of the following services, which are relevant to the transaction of the applicant is as under: 400 Heading 9985 Support services 401 Group 99851 Employment services including personnel search, referral serv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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