Category - painting - Applicability of notification

[BAL KRISHAN GARG]

Dear Madhwan, In my query,if A can'nt be treated as a Job Worker then under what head ? He is painting c/fan blades for B and B after processing further sales after paying duty.Here i draw your attention that A is producing /processing of goods for ,or on behalf of B and if i not use the word job work and A is processing the goods using the raw mat.or semi finish.goods and B is using the processed goods in relation to manufacture of any other goods specified in Shd.I of cen.excise tariff and B is clearing the goods only after payment of duty.Whether Notification No.8/2005-ST will not apply vide explanation II. Further Manpower agency relation of employee-employer must exit alongwith the individual must under the direction of B but in the instatnt case although relation exist between individual and A but direction of B to individuals not exist so how it will apply ?

[madhavvan n]

based on your clarification Company A will be liable for service tax under head business auxiliary service as clarification of 1/3/05 given below will not apply to you as you are performing the job in the premises of mnaufacturer and you are not sending the goods which is provided in the clarification With effect from 01-03-2005 - Exemption has been provided from service tax on business auxiliary service, to a person producing goods, from the inputs received from a manufacturer and sending the resultant product to the same manufacturer for further manufacture of final products, which are cleared on payment of excise duty. The above change will come into effect immediately charge service tax @10.30% on B under head business auxiliary service.

[Mukesh Kumar]

Regarding, classification of the service under the category of Manpower recruitment and supply service, be careful, since 2005, even supply of manpower is included within its scope. However, if the terms and nature of agreement is describing the activity in some other manner, i agree with Mr. Madhawan that it is to examined carefully further.

AI Summary

Business auxiliary service: service tax liability arises where a processor works on manufacturer's premises and goods are not sent back. A paints/processes fan blades for B using inputs and the processed goods are cleared by B after payment of excise duty. The March 2005 exemption for business auxiliary services-applying where a person produces goods from inputs received and returns the resultant product to the same manufacturer for further manufacture-does not apply on these facts. The activity performed in the manufacturer's premises and the contractual/supervisory arrangements indicate the service is taxable as Business Auxiliary Service, while classification as manpower supply depends on the agreement and control over personnel.