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Contract of service and Contract for service- differenceIn both the contract of service and contract for service there is transfer of property in goods but the difference is of degrees i.e. "dominant" or "incident".
In a contract of service the employer normally enjoys the power of control over the work of the servant and the servant is bound to obey the orders/instructions of the master. The employer’s right to reject the end product, if it does not conform to the instructions of the employer, speaks for the element of control and supervision. So also the right of removal of the workmen or not to give the work has the element of control and supervision. The right of rejection coupled with the right to refuse work would certainly establish “master-servant relationship”.
There should be:
(i) Employer-Employee relationship.
(ii) Usually a continuous relationship.
(iii) A duty of care owed to employees, and
(iv) The employer is generally liable for the vicarious acts of
(v) Wages/Salary payment method.
(vi) Subject of contract is to carry on continuous work.
In a contract for service, on the other hand, an independent contractor, undertakes to produce the required result, but in the actual execution of the job to produce the result, he is not under the order or control of the person for whom he executes that work. He is free to use his discretion. A contractor has been defined as a person who, in the pursuit of an independent business, undertakes to do specific jobs of work for other persons without submitting himself to their control in respect of the details of the works and jobs.
There should be: (i) Employer-Independent Contractor relationship
(ii) A relationship organised around the completion of a once-off piece of work.
(iii) A duty of care, arising from occupiers’ liability.
(iv) The employer is generally not liable for the vicarious acts of independent contractors.
(v) In general, protective legislation does not apply, except for the Safety, Health and Welfare at Work Act, 1989 and the Equality Act.
(vi) Various methods of payment, including lump sum per job.
(vii) Subject of contract is once-off job
Case- The Supreme Court in the case of Shining Tailors v. Industrial Tribunal II, U.P, it was held that tailors working on piece-rate basis in a big tailoring establishment are workmen of the owner of the establishment. Every piece-rated workman is not an independent contractor, piece-rate payment meant, payment correlated to production. It is a well-known mode of payment to industrial workmen. ( contract of service).|
In Achutha Achar v. Sharada Jewellery Mart, (1968) 1 LLJ 500 (Mys), it was held that goldsmiths were engaged by a gold merchant for manufacturing jewels for him, where such goldsmiths were asked to finish jewels within a given time or earlier and engage themselves in other works, it has been held that it was a contract for service and the goldsmiths were independent contractors. ( contract for service).
Service by rendering- Doctors:Doctors come under the purview of Consumer Protection Act. A landmark judgement in this regard was by the State Commission of Orissa in Smt. Sukanti Behera v. Dr. sashi Bhushan Rath, where it was held that the patients have a right to challenge the quality of health care services.
In Indian Medical Association v. V.P. Santh (1995) , it was held that medical services come under the purview of Consumer Protection Act.
Nature of Service Tax-Service tax is an indirect tax levied under the Finance Act, 1994, as amended from time to time, on specified services. At present, there are approximately 96 categories (including 15 new services introduced by Budget 2006) of services taxable under the service tax net. It is levied at a uniform rate of 12.24%.
The new services made taxable include services provided by share transfer agents and registrar to issues, recovery agents, maintenance and management of Automatic Teller Machines, sale of advertising space or time (except for print media), sponsorship of events by companies (except for sports), public relations management services, ship management services, international air travel (excluding economy class), rail container handling services (excluding haulage charges), cruise ship travel, Internet telephony services, business support services, auctioneers’ service (excluding auction of property under directions or orders of a court of law or auction by the government) and credit card, debit card and other payment card-related services.
The value of service generally liable to service tax is the gross amount charged by the service provider for service rendered. Out of pocket expenses such as (travel, lodging, etc) paid on behalf of the client and recovered on actual basis (supported by documentary evidence) have been clarified for certain services as not being liable to service tax.
The rights of consumers needs to be protected since they avail services given by the service providers based on trust and faith and thus it’s a necessity to keep a check on the service providers for the sake of service recipient.
About the author: I am a 5th year law student from Symbiosis Law School, Pune. I am dedicated and hardworking student and amongst top 10 students in my college. I love to participate in extra curricular activities like- college committee, seminars, essay writing competitions and sports like swimming. I want to become a great lawyer one day and make my parents, college and country proud of myself.
The author can be reached at: firstname.lastname@example.org
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