Liability and category of service tax

[sunil mehta]

A dealer of glass (plain glass & mirror glass) makes designs on glass (as per requirement of end user) and then sells them to customers after cutting them as per their order.The work of 'making designs on glass sheets' is entrusted to outside person.(jobworker).The jobworker engaged in 'putting designs ' on glass sheets gives some chemical treatment to glass sheets before it is ready for delivery to the dealer.He uses his own labour and premises for such jobwork.The jobworker gets labour charges fron the dealer. Query:- 1)whether job work (labour charges) income of jobworker is liable to service tax? 2)If yes,then under which category ? 3)Is the process of 'putting designs on glass called 'manufacture' under C.Excise? 3)Whether dealer who sells glass sheets(after 'putting designs) to ultmate customers is any way covered under C.Excise or S.Tax?

AI Summary

Service tax liability for jobworker design and chemical processing clarified; taxable unless job-work exemption conditions are met.
The jobworker's design and chemical processing of glass is not manufacture and so not subject to excise; however, the jobworker's labour receipts are taxable unless they meet the statutory job-work exemption conditions (client-supplied goods, return to client for use in manufacture of dutiable goods, and final products not nil-rated or exempt). Where exemption conditions fail, the jobworker owes service tax and the dealer cannot claim input credit because the dealer's subsequent sale does not amount to manufacture and may be treated as exempt.