TaxTMI 
TaxTMI 
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.
Service tax on job work within factory premises
20 Feb 2017 
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Process amounting to manufacture: service tax not leviable on job work when the activity constitutes manufacture.
Service tax is not leviable on job-work within factory premises when the contractor's activities amount to manufacture, because such processes are covered by the negative list even if central excise duty is exempted; processes that do not amount to manufacture remain subject to service tax. A proposed amendment would define "process amounting to manufacture or production of goods" and shift these items into the exempted services list under the Mega Exemption Notification. (AI Summary)
Service tax is not leviable on job-work within factory premises when the contractor's activities amount to manufacture, because such processes are covered by the negative list even if central excise duty is exempted; processes that do not amount to manufacture remain subject to service tax. A proposed amendment would define "process amounting to manufacture or production of goods" and shift these items into the exempted services list under the Mega Exemption Notification. (AI Summary)