Job Work -Service Tax

[DEEPAK SHARMA]

One is manufacturing Readymade Garments (Later RMG) on belaf of his clients

* Fabrics is raw material of his clients

* His Clients provide him fabrics and also designs and sizes (which types of RMG to be made)

* He is manufacturing RMG and return to their clients on job work basis.

Is Service Tax Applicable on them?

[Rajagopalan Ranganathan]

Sir,

In my opinion the process undertaken by you amounts to manufacture under Section 2 (f) of Central Excise Act, 1944. Therefore you need not pay service tax.

[Ganeshan Kalyani]

The process amounts to manufacture and therefore service is not applicable.

[Krishan Gopal]

There is no liability of service tax as per notification no. 08/ 2005 Service tax.

Gopal

AI Summary

Manufacture classification: job work on client-supplied fabrics treated as manufacture under central excise definition, not service-taxable. The processing of client-supplied fabrics into readymade garments on a job-work basis is classified as manufacture under the central excise definition, because the client provides raw materials and specifications while the job-worker effects conversion; consequently the activity is not liable to service tax, supported by the applicable service-tax notification exclusion.