Job Work and no materials are involved

[Alevoor Raghavendra]

Dear Sir,

My clients are doing purely job work. For example, if the tools are given, they does the job work as per the requirement of the customer like bending, turning etc. If the fabric is given, they do the finishing. No materials are used. For example steering shaft. The job work will be to thread it and so on. Please clarify whether to add the service tax on the same.

Regards,

A R Bhat

[Mahir S]

Sir,

can you please first let us know your views on the issue.

[VVFINDIA Taloja]

Dear Mr. Bhat,

If principle manufacturer is paying excise duty on the final goods sole on which this job worked material used, then job worker need not to pay the service tax. It is also to be noted that, whether the job worker has crossed the threshold limit of service tax.

[Mahir S]

Sir,

Honestly, the views were called to understand the nature of activity undertaken and to answer the query in a better way.

(i) regarding job work done on fabric, any job processing done on any of the production stage, right from fibre to the garment is covered under the defintion of Textile Processing and therefore exempted under Notification 25/2012 dated 20/06/12. Hence, no need for payment of any service tax on any such job work activity, irrespective of the amount of job work undertaken.

(ii) regarding process relating to blending, turning etc., such process does not amount to manufacture, However, it is just to be ensured that the supplier is thereafter carrying out any further process on such tools (which he surely would be doing) or further clearing goods to any other supplier. Hence, it appears no service tax liability on job worker, as excise duty is surely been paid by the suppliers or is under exemption from payment of excise duty due to not crossing the threshold exemption limit by the supplier

In both the cases,in view of above, it is therefore assumed that service tax liability shall not arise on the job worker. Also, it seems that activities are carried on without the aid of power.

AI Summary

Service tax on job work: textile processing is exempt and mechanical job work may be non-taxable where excise on final goods is paid. Service tax does not arise on job work that is textile processing exempt under Notification 25/2012. Mechanical job work on supplied tools or components likewise attracts no service tax where the principal manufacturer pays excise duty on the final goods; consideration must be given to whether the supplier undertakes further processing, whether excise exemption applies to the supplier due to threshold limits, and to factual aspects such as absence of power use.