Serive Tax

[JITENDER THAREJA]

BASICALLY WE HAVE A EXCISE UNIT AND WE ARE ALSO PAYABLE OF SERVICE TAX. IF SOMEONE COMPANY APPROACHED US FOR THE MACHININGOF THEIR CASTING FROM US. THAN WHAT WILL THE PROCEDURE TO PAY THE SERVICE TAX.

[PAWAN KUMAR]

Dear Sir,

As per my view, If the principal company who supply their casting to you under cover of job work challan under rule 4(5)(a) of Cenvat Credit Rules, 2004, and you do machining activity on such casting and return the machined casting, No need to pay service tax on such machining charges if the principal uses such machined casting into his final products. Your activity of machining should not be manufacturing activity in such case.

[JITENDER THAREJA]

DEAR SIR THNAKS BUT,

A TRACTOR MANUFACTURING CO. HAS APPROACHED US FOR THE MACHINING OF THEIR CASTING FROM US. WHICH IS SITUATED AT EXCISE FREE ZONE HIMACHAL PRADESH AND OUR UNIT COVERED UNDER EXCISE and SERVICE TAX RULES IN HARYANA.THEY SENT US METERIAL ON CHALLAN BASIS FOR JOB WORK .BUT WHAT WILL THE SERVICE TAX PROCEDURE .( MY MEANS SERVICE TAX WILL BE PAYABLE ON JOB WORK VALUE OR JOB WORK + METERIAL VALUE.)

[Mahir S]

Sir,

In your case, you need to raise the service tax bill only on Labour charges i.e. on the Job work value.

[PAWAN KUMAR]

Dear Sir,

As per my view, if the activity is not amount to manufacture and appropriate duty is paid by the principal on the excisable final products, job worker will not liable for service tax on job work charges. but if the excisable final products are exempt from the duty of excise, job worker is liable for service tax on job work charges.

[YAGAY andSUN]

Dear All,

It is settled legal position casting becomes finished goods when machined. Please check para 8.4.2 of the Central Excise Law and Practice authored by Mr. V.S.Datey.

Regards,

NeelamTaneja- Executive Consultant

(YAGAY and SUN - Management, Business and Indirect Tax Consultants)

AI Summary

Machining Company Seeks Clarity on Service Tax for Job Work: Only Labor Charges Taxed Unless Manufacturing Involved A company involved in machining castings is seeking clarification on service tax obligations. They receive materials from another company for job work, questioning whether service tax applies to the machining charges or both the job work and material value. Responses indicate that service tax is generally applicable only to labor charges unless the activity constitutes manufacturing or the final product is exempt from excise duty. If the machining does not amount to manufacturing and the principal pays excise duty on the final product, service tax is not required on job work charges.