Job work & Service Tax

[Srivatsan Krishnamachari]

Dear Experts,

I need clarification on one issue. X company is doing job work for Y company, where Y company is paying excise duty on the total material value. Where as X company is not paying any service tax on the job work done. Since Y company is paying excise duty on the total value of the material, is it essential to pay service tax by X company?

Kindly clarify

Srinivas

AI Summary

Job work tax treatment: excise or service tax depends on whether the process amounts to manufacture; otherwise service tax applies.
If the job-work process amounts to manufacture under Central Excise law, excise duty is leviable on goods produced by the job worker and may be credited or managed under statutory job-work procedures; if the process does not amount to manufacture, the job worker must charge service tax on the gross value and the principal may claim input service credit, subject to notifications excluding intermediate job-work processes where appropriate duty is payable by the principal.