Liability and applicability of excise duty and service tax

[BAL KRISHAN GARG]

Respected Rama Krishna Ji, As you have pointed out regarding the activity of A . Here A is doing Job Work only for B and C. Although his work is having exemption under notification 8/2005 as the notification says if the receiver paying excise duty after the process on the goods is completed by A then Service Tax is not liable.Till date A was doing the work for C on which C was paying Excise Duty hence A was not come under service tax provisions .But B approached A for Job Work but the condition is A must be registered under Service Tax .I hope you understand the whole thing . In brief , A is doing job work for c delhi based enterprises and excise paying and B Baddi based enterprises availing exemption under excise duty approached A for job work provided A must get registration under ser.tax. here A has to billing to B and C . My querry is as the B is not assessable under excise law and ultimately will not pay excise duty on the goods processed by A will attract Service Tax and C is assessable under excise duty and pay the excise duty on the goods processed by A hence A is exempt from service tax as per my understanding .I need further clarification in the matter so necesswary steps may be taken . Thanks BAL KRISHAN GARG

[Rama Krishana]

I believe that I understood the query, but the difference is that you are trying apply the exemption notification first, whereas I apply the statutory provisions first and if required the exemption notification. Where the nature of processing is of excisable goods, the activity is not taxable under service tax at all and therefore notification no. 8/2005 is not applicable at all. Yes, if the activity undertaken by the job worker A is not in the nature of manufacturing of excisable goods, he would be liable to pay service tax. So, it is suggested that you decide that what is the nature of activity undertaken by the A?

AI Summary

Service tax on job work hinges on whether processing amounts to manufacture of excisable goods, affecting tax liability. Whether a job worker's activity attracts Service Tax depends on whether the processing constitutes manufacture of excisable goods; if it does, service tax does not apply and notification 8/2005 is inapplicable, but if it does not, the job worker must register and pay service tax.