Supply of Computer Operators or supply of programmers to in person including the Govt. of Bihar or any authority of the State Government will amount to Taxable Service of Manpower Recruitment or Supply of Agency under the Finance Act, 1994 w.e.f.07.07.1997.
2. According to Sub-section 68 of Section 65 of the Finance Act,1994, “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 client.” The scope of statutory definition of Manpower Recruitment or Supply Agency has been expanded by the Finance Act, 2007 by stating that the service would include services in relation to pre-recruitment screening , verification of credentials of candidates and authenticity of document submitted by the candidate and verification of antecedent. Further, it is pertinent to note that in the Definition Clause the word “Client” has been Substituted by “to any other person “ vide Finance Act, 2008 w.e.f. 16th May 2008. Thus constitution of Service Provider and any fiduciary relationship between Service Provider and Service Recipient becomes irrelevant now .
3 Taxable Value of Manpower Recruitment or Supply Agency : As per section 67 of the Finance Act, 1994, the value of the taxable service shall be the gross amount charged by Service Provider for the Taxable Service provided or to be provided by him and where the gross amount charged by the Service Provider is inclusive of Service Tax payable, value in such case shall be such amount as with the addition of tax payable, is equal to gross amount charged. Thus value for the purpose of charging Service Tax is the gross amount received as consideration for the provision of Taxable Service. All expenditure or cost incurred by the Service Provider in the course of providing a Taxable Service forms integral part of Taxable Value and are includible in the value. However Rule 5 of Service Tax(Determination of Value) Rules, 2006 pertains to reimbursable expense incurred by the Service Provider as pure Agent of his Client. Explanation (I) of Rule 5 (2) clearly specifies the criteri to decide the whether the Service Provider acts as pure agent or not in given situation. In case agency function, the agent neither intends to hold any title to goods or services and also never use such goods or services so procured. It is also important to note that provider service Provider only receives the actual amount incurred to procure such goods and services.
4. In the light of the above provision of law, the Corporation, while raising bills to various departments of the Government of Bihar, must ensure that the actual amount of all statutory payments like EPF contribution or ESIC Contribution for recruited persons must be shown to be expenditure on behalf the said department of Government of Bihar in his invoice on only actual basis under express agreement with the Service Recipient Department of the Govt. of Bihar and self –assessment memorandum of the service tax return should included a note disclosing reimbursable expense.
This Opinion is without any prejudice and without any indemnity against any order/s , decision/s or judgements of any court of law, Tribunal or legal proceedings arising against the corporation in future whatsoever.