SERVICE TAX NOT BE APPLIED ON JOB WORK MATERAIL BEING RECEIVE ON 57f4

[ace nitriders]

Dear Sir,

on which notification or rule it is cleared that job worker should not add service tax on materail being issued on 57F4 for processing on returnable basis

[KASTURI SETHI]

You cannot intermingle Central Excise duty and Service Tax. Both are entirely different concepts. See Rule 10 A of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Job work was exempted because its cost was included/added in the manufacture of dutiable final product (notification no.214/86-CE as amended from time to time read with Rule 57 F(4) of Central Excise Rules, 1944. If job-work (process) amounts to manufacture, no Service Tax is leviable. Either Central Excise duty or Service Tax is/was to be charged and not both.If the process of job-work does not amount to manufacture, it will be treated as service and it falls in the category of Business Auxiliary Service because job-worker works for and on behalf of the principal. Cost of job-work + profit will be added to the transaction value of final product.

[(19) “business auxiliary service” means any service in relation to, -

(i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or

(ii) promotion or marketing of service provided by the client; or

[ * * * * ]

(iii) any customer care service provided on behalf of the client; or

(iv) procurement of goods or services, which are inputs for the client; or

  [Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, “inputs” means all goods or services intended for use by the client;]

[(v) production or processing of goods for, or on behalf of, the client;]

(vi) provision of service on behalf of the client; or

(vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision,

and includes services as a commission agent, [but does not include any activity that amounts to manufacture of excisable goods].

Kindly elaborate your query in order to enable the experts to give comprehensive reply.

AI Summary

Clarification on Service Tax for Job Work Under Rule 57F4: Manufacturing Exempt, Business Auxiliary Service May Apply. A user inquired whether service tax should be applied to materials received for job work under Rule 57F4. The response clarified that Central Excise duty and Service Tax are distinct, and job work is exempt from service tax if it constitutes manufacturing, as its cost is included in the final product's price. If the job work does not amount to manufacturing, it is considered a Business Auxiliary Service, where service tax may apply. The response referenced specific rules and notifications, emphasizing that only one of the taxes should be charged, not both.