Service tax on sub Job work

[Murari Agrawal]

Dear Experts,

We are receiving inputs for Job work under rule 4(5) (a). Some times due to capacity hindrance, we get the job done from a sub job worker.

we have been advised in this Forum that since there is nothing in the rules for such activity, we may carry on.

We shall be paying job charges to the sub job worker less than what we get from our principal.

Our query is  whether Service tax will be payable and if yes whether on full job charges received or after reducing job charges paid to the sub job worker.

AI Summary

Service tax liability: intermediary job workers are taxable on their consideration even if sub-job manufacturers attract excise.
Liability depends on each participant's role: a sub job worker who manufactures goods on which the principal bears excise is treated as manufacturer and subject to excise, while an intermediary job worker who arranges processing and receives consideration without manufacturing is liable to service tax on that consideration. Each service provider is independently liable to register and pay tax; tribunal decisions have held subcontractors responsible for unpaid service tax, and the main contractor may claim cenvat credit for tax paid by subcontractors where applicable.