SERVICE TAX ON JOB WORK AS PER BUDGET 2017

[Rajeev Khulbe]

GOOD EVENING TO ALL MY EXPERT.

PLEASE CLEAR MY DOUBT REGARDING SERVICE TAX ON JOB WORK DONE FOR EXCISABLE UNIT.SIR BEFORE ANNOUNCING BUDGET 2017. IF ANY INDIVIDUAL/CO. /FIRM DOING JOB WORK FOR EXCISABLE UNIT THEN NO SERVICE TAX ADDED BY SERVICE PROVIDER.BUT SIR AS PER ANNOUNCING IN BUDGET 2017 REGARDING SERVICE TAX ON JOB WORK. SIR CAN YOU PLEASE TELL ME THAT WHAT CHANGES IN SERVICE TAX ON JOB WORK. IN BUDGET.

[Rajagopalan Ranganathan]

Sir,

Presently, clause (f) of section 66D of the Act [Negative List] covers “services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption”. These services are proposed to be omitted from the negative list. The service tax exemption on them is being continued by incorporating them in the general exemption Notification No. 25/2012-ST as amended by notification No. 07/2017-ST, dated 2nd February, 2017.

Sl. No. 30 of Notification No. 25/2012-ST dated 20.6.2012 as amended exempts the services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption and any goods excluding alcoholic liquors for human consumption, on which appropriate duty is payable by the principal manufacturer.

[Ganeshan Kalyani]

The exemption of service tax on job work if the process does not amounts to manufacture is omitted from Negative list of services and it is still exempted by including it in mega exemption notification. The net impact is Nil.

Further the date of effect of this amended is not yet given.

[KASTURI SETHI]

Such change is effective from the date of enactment. The reason of shifting the entry from Negative List under Section 66 D (f) to the list of exempted services under Notification No.25/12-ST (Serial No.30) is that Central Excise duty must be paid, if process amounts to manufacture. It is evident from the language of Notification No.7/17-ST dated 2.1.17 extracted below

“process amounting to manufacture or production of goods” means a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 (1 of 1944)

[YAGAY and SUN]

We endorse your view and understanding on this matter.

[Ganeshan Kalyani]

Thanks.

AI Summary

Service tax on job work moved from negative list to exemption, preserving no net tax change for excisable processes.
Service tax on job work for excisable units was moved from the negative list to an exempted-services notification, retaining the exemption where the principal manufacturer pays appropriate excise duty; the statutory definition of "process amounting to manufacture or production of goods" is linked to processes on which excise is leviable under the Central Excise Act, and the change is effective from enactment.