By laksh5382 
Supply of manpower for work in India to foreign customers who have no permanent establishment here will not be treated as export of services and will be attracted accordingly GSTUttar Pradesh Authority for Advance Ruling (UPAAR) has said.
The applicant, Noida-based Pacific Staffing Solutions, sought advance ruling on its plans to provide manpower services. It plans to enter into agreements with various clients to provide human resource related services, primarily manpower supply services, to clients based outside India who do not have any establishment or presence in India.
These clients will avail general staffing services like supply of contingent labor (contract resources) and FTE placement (permanent resources) at various locations in India at their end client offices/factories as per the requirement raised by their various counterparts. In India or outside India.
- Also read: As per UPAAR rules, pre-paid vouchers form part of supply of ‘goods’ which is taxable at 18%
Under contingent labor supply, the applicant will manage his entire payroll life cycle from joining to exit and will charge a fixed mark-up fee on the monthly payroll/CTC of the contractual resources.
Similarly, one time fee will be charged for FTE (Full Time) placements. These services include supply of manpower to corporate clients, customized professional recruitment services, manpower management services, BPO services, labor dispatch corporate training and other related services as per the requirement of the clients.
“The applicant is liable to pay tax as it does not fall within the scope of export of services,” the UPAAR said in its recent judgment after hearing arguments by CA Siddharth Kejriwal and his associates Prakash Joshi and Ashish Mittal on behalf of the applicant.
The quasi-judicial body also said that the place of supply of service would be the place where the services are actually performed.
In the first case where the applicant is providing recruitment services, the selected candidates are providing their services in India.
In the second case where the applicant is providing manpower supply services, the candidate is providing services in India. Thus, in both the cases the services are actually being performed in India. This means that these services cannot be called export of services.
It may be noted that the decision of the AAR is binding only on the applicant and the jurisdictional tax authorities. However, it can be relied upon in such a case. Moreover, such decisions also become the foundation of many policy changes.