Service tax applicability on job work done

[BAL KRISHAN GARG]

Sir, My client A is doing job work on piece rate basis for B a establishment in Baddi in Himachal Pradesh and for C a establishment in Delhi .His labour are working in these estiblishments and the payment was made to A after confirmation from the Quality confirmation department of the establishments and calculated on piece rate basis. Here B is exempted from excise duty and C is not exempted from Excise . A has done work up to august , 2009 nearly Rs.5 - 6 lacs in total up to date . Now M/S B asked to A for registration in Service Tax and ready to pay the tax. The question is Here B is exempted from payment of excise duty whether the Job Work done by A will be chargable to Service tax on the job work done by A in future as Notification 8 /2005 Explain that if any job work in done on the material supplied by the service receipient then it will be exempted from service tax provided excise duty is payable by receipient ? Further he will do job work on the material provided by C also in Delhi .Here C is paying Excise Duty whether A is liable to pay service tax on the job work for C ? My second querry is when A will get the Registration under Service Tax and the same bill book will carry on i.e. for B AND FOR C WHETHER HE CAN CLAIM SERVICE TAX EXEMPTION UNDER NOTIFICATION 8 /2005 ON THE JOB WORK DONE ON THE MATERIAL RELATED TO c IN DELHI ? How the accounts will be prepared from Service Tax Angel in a case when there are two units one is exempted and another is excise paying . On what amount A has to pay Service tax. Thank to all friends . BAL KRISHAN GARG

[Rama Krishana]

Irrespective of the fact that B is exempt from duty of excise, you need to examine that the activity / processes undertaken by A is excisable or not? If the processes are excisable in that case even if the supplier of the material enjoys the benefit of exemption under central excise, A would be excluded from purview of service tax. No matters, B is ready of pay service tax. No matters C is paying duty of excise.

AI Summary

Service tax on job work: excisability of processes determines taxability, not the recipient's excise exemption, for job workers. Service tax on job work turns on whether the processes performed by the job-worker are excisable; if they are excisable, those services are excluded from service tax irrespective of the recipient's excise exemption. Where processes are not excisable, the job-work services remain taxable. The job-worker must segregate receipts and apply differing tax treatment and registration/invoicing according to the excisability of the work and the recipient's position.