In the instant case, undisputedly the applicant is the person who is liable to pay salary/wages to the work-men employed by him under Employment Agreement to provide manpower services to his clients and just showing such amount in a separate manner in the invoice doesn’t shift his liability on the recipient of services and makes him qualify as a pure agent in terms of rule 33 of the CGST/WBGST Rules, 2017.

We further find that by virtue of the “Employment Agreement‟ made between the applicant (service provider) and work-man (third party), the applicant, being the employer is liable to make payment to the third party (work-men/employee). We therefore find no other services other than manpower services are provided by the applicant to his client. Admittedly, in the instant case, the applicant first enters into an agreement to his client for supplying of manpower services and subsequently engages different work-men (third party) at the place of business of his clients and thereby supplies manpower services only. Rule 33 of the CGST/WBGST Rules, 2017 clearly speaks that one of the conditions that has to be satisfied for exclusion of expenditure or costs from the value of supply which has been incurred by a supplier as a pure agent if the services procured by the service provider, as a pure agent of the recipient of service, from the third party are in addition to the services which he provides on his own account. The applicant thus engages contract labour towards supply of manpower services as requited by his clients (recipient of services). Manpower Agency cannot escape GST liability on Gross amount by showing Services Charges and Salary/Wages Separately

Manpower payroll