Dear Expert,
Can a manufacturer give production work on piece rate with in his own factory to contractors on job work under notification 214/86-ce-dtd.25.03.15 ( contractor will bring his labour only , all other are of manufacturer)
Suppose 'X' is a manufacturer of fabric.
'X' desired to give production to contractors based on per kg. RM/Machines/place all are within factory of 'X'and belongs to 'X'.Contractor will employe labour only to produce the good and receive payment on piece rate/per kg.
Regards.
Manufacturer's Piece-Rate Hiring: Excise Duty Exempt, Service Tax Applies Under Manpower Supply Services, Reverse Charge Confirmed A manufacturer inquires about hiring contractors on a piece-rate basis within their factory under notification 214/86-CE. The contractors would provide labor, while all other resources belong to the manufacturer. Experts responded that since the goods remain within the factory, it constitutes a labor contract, not a job work under the specified notification. Thus, excise duty does not apply. However, service tax would be applicable, as the arrangement falls under manpower supply services, not job work. Service tax applicability under reverse charge is confirmed if the service provider is an individual or similar entity, and the recipient is a corporate body. (AI Summary)
TaxTMI 
TaxTMI 
