Service tax on Jobwork

[GR Satishkumar]

Dear Experts,

Our company engaged in Furniture Manufacturing.Company Registered under Central Excise and Service Tax also.

We received material for job work from one company and returned after job work. Company will pay excise duty on finished goods. Now my question is on Job work amount we need to charge service tax or not.

If no need to charge service tax on job work amount, under which section which is exempted.

Please clarify.

[Rajagopalan Ranganathan]

Sir,

As per sl. No. 30 (c) of Notification No. 25/2012-ST dated 20.6.2012 as amended "Carrying out an intermediate production process as job work in relation to any goods excluding alcoholic liquors for human consumption, on which appropriate duty is payable by the principal manufacturer."

Therefore you need not pay any service tax on job work charges collected by you.

[YAGAY and SUN]

We endorse the view of our learned friend.

[KASTURI SETHI]

I support the views of both experts.

[Ganeshan Kalyani]

The process amounts to manufacture (intermediate product) where duty is to be paid by principal manufacturer hence service tax is not applicable.

Fin act 1994, Chp-5, section 66D. Negative list of services, ((f) any process amounting to manufacture or production of goods. Job work process is also amounting to manufacture new distinct product. Hence, ST is not application on the subject job work.

However, ST is applicable on job work like repair, repair etc

[KASTURI SETHI]

Arunachalam Siva Ji,

Yes. You are right. Exemption from ST is available because here process amounts to manufacture (answered or supported by all experts) but the question arises is under which Section exemption is available. There is a difference between Serial No. 30 of Notification No.25/12-ST and Section 66 D(f).Section 66 D stands for negative list and sub-section (f) includes 'any process' and Mega Exemption Notification No.25/12-ST includes only ''Intermediate production process'.

The query does not talk of intermediate production process. So the party is at liberty to take the benefit of 'any process' rather than resorting to 'Intermediate production process' under Mega Exemption Notification.

What you want to say exemption from ST is available but route is different. I agree with you. You X-RAYED the replies and Section 66 D and Mega Exemption Notification as well.

AI Summary

Service tax exemption for job work that amounts to manufacture; repair-type job work remains taxable under service tax rules.
Job work that amounts to manufacture or an intermediate production process for goods on which the principal manufacturer pays duty is not subject to service tax; the exemption derives from the negative-list principle and related exemption provisions, while repair-style job work that does not amount to manufacture remains taxable and duty on finished goods is payable by the principal manufacturer.