Labour Job

[SURYAKANT MITHBAVKAR]

We are manufacturer of pharma machine registered under Excise Act.

We are having one associate company manufacturing pharma machine registered under Excise Act

Can we do labour job for each other issuing service tax invoice and using 214/86 Challan for movement of material.

[Ganeshan Kalyani]

If the process amounts to manufacture then excise duty is applicable and if not then service tax is applicable. This is basic criteria.Thanks.

[KASTURI SETHI]

I agree with the views of Sh.Ganeshan Kalyani, Sir. Further I add that Notification No.7/17-ST dated 2.2.17 (which will come into force from the date of enactment) must be taken care of. "Any process amounting to manufacture ----------" etc.has been brought under Notification No.25/12-ST as amended at serial no.30.There is a world of difference between "Negative List" and " Exempted List".

[Rajagopalan Ranganathan]

Sir,

If you avail Notification No. 214/1986-CE then the process undertaken by you will be manufacture and you need not pay service tax. Since you are availing Notification No. 214/1986-CE you can return the processed goods without payment of duty to your unit where the production of the machinery is completed.

Sl. No. 30 (ii) (c) of Notification No. 25/2012-ST dated 20.6.2012 as amended exempts "Services by way of carrying out any intermediate production process as job work not amounting to manufacture or production in relation to any goods excluding alcoholic liquors for human consumption, on which appropriate duty is payable by the principal manufacturer. In this case also you need not pay any service tax if the process carried out by you second unit is intermediate production process and appropriate duty is paid by first unit.

[YAGAY andSUN]

Pure labour job will attract only service tax and Notification 214/86 would not be applicable.

[Himansu Sekhar]

Job work amounting to manufacture under notf. 214/86 will not attract service tax. It may be done for each other.

[Nash Industries I Pvt Ltd]

The condition of 214/86 is that the principal manufacturer (the person sending the goods) undertakes to pay the excise duty and that the job worker is exempted.

As the process amounts to manufacture, is exempt from the levy of service tax. However, it is taxable under GST.

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Renganathan.

AI Summary

Manufacture vs service tax: job work is excise-liable if process amounts to manufacture, otherwise service tax applies. Whether labour job work between associated manufacturers attracts excise or service tax depends on whether the process amounts to manufacture. If it does, excise duty applies and Notification No.214/1986 CE can exempt the job worker provided the principal manufacturer undertakes to pay duty and can return goods without duty; if not, service tax applies unless an intermediate production process exemption applies with the principal paying appropriate duty.