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Manpower recruitment or supply agency - Taxable Services - As appliable on or before 30-6-2012

 
Chapter No. 010
Manpower recruitment or supply agency
 

Manpower Recruitment and Supply Agency

(w.e.f. 7.7.1997)

What is taxable - 65(105)(k)

Any service provided or to be provided to any person, by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner;

Explanation.—For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, recruitment or supply of manpower includes services in relation to prerecruitment screening, verification of the credentials and antecedents of the candidate and authenticity of documents submitted by the candidate.

Who is the receiver of service

Upto 15-5-2008 - A Client, 

W.e.f. 16-5-2008 - Any person 

Who is the provider of service

Any other person

Meaning of Manpower Recruitment or supply agency - 65(68)

"manpower recruitment or supply agency" means any person engaged in providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to any other person;

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A. As per Paragraph No 6. of Circular No. 96/7/2007 dated 23/8/2007 states that :-

"6. This circular supersedes all circulars, clarifications and communications, other than Orders issued under section 37B of the Central Excise Act, 1944 (as made applicable to service tax by section 83 of the Finance Act, 1994), issued from time to time by the CBEC, DG (Service Tax) and various field formations on all technical issues including the scope and classification of taxable services, valuation of taxable services, export of services, services received from outside India, scope of exemptions and all other matters on levy of service tax.  With the issue of this circular, all earlier clarifications issued on technical issues relating to service tax stand withdrawn."

B. Further Circular No 96/7/2007 dated 23/8/2007 clarifies that :-

Issue - 010.01 / 23.08.07

Educational institutes such as IITs, IIMs charge a fee from prospective employers like corporate houses / MNCs, who come to the institutes for recruiting candidates through campus interviews.  Whether services provided by such institutions in relation to recruitment of manpower are liable to service tax under 'manpower recruitment or supply agency' service [section 65(105)(k)]?

Clarification

'Manpower recruitment or supply agency' is defined as "any person engaged in providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to a client" [section 65(68)]. 

Educational institutes such as IITs and IIMs fall within the definition of 'manpower recruitment or supply agency', and service tax is liable on services provided by such institutions in relation to campus recruitment under section 65(105)(k).

Issue - 010.02 / 23.08.07

Business or industrial organisations engage services of manpower recruitment or supply agencies for temporary supply of manpower which is engaged for a specified period or for completion of particular projects or tasks.

Whether service tax is liable on such services under manpower recruitment or supply agency's service [section 65(105)(k)]

Clarification

In the case of supply of manpower, individuals are contractually employed by the manpower recruitment or supply agency. The agency agrees for use of the services of an individual, employed by him, to another person for a consideration. Employer-employee relationship in such case exists between the agency and the individual and not between the individual and the person who uses the services of the individual.

Such cases are covered within the scope of the definition of the taxable service [section 65(105)(k)] and, since they act as supply agency, they fall within the definition of "manpower recruitment or supply agency" [section 65(68)] and are liable to service tax.

 
 
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