Service tax on job work within factory premises

[NAUSHERAWAN SM]

One of our contractors engaged in manufacturing of intermediate products where machines, materials, power, space and spares are provided by us within the factory premises on piece meal basis under job work. The contractor provide their own labour who remains under their own superintendence and control on receipt of a consideration on piece-meal basis. The job is purely excisable goods. We removes goods certain further processing like machining, painting, inspection etc. on payment of Central Excise duty. Let us know whether service tax is payable for such activities by the contractors/jobworker.

AI Summary

Service tax is not applicable on job work within factory premises if the process amounts to manufacture under Central Excise Act. A discussion on whether service tax is applicable to job work within factory premises, where contractors manufacture intermediate products using provided resources, concluded that service tax is not applicable if the process amounts to manufacture. This is because such processes fall under the negative list or are exempted under the Central Excise Act. Replies referenced an Education Guide by CBEC and Notification No.7/17-ST, indicating that if Central Excise duty is applicable, service tax is not required. The consensus among participants was that manufacturing processes are exempt from service tax.