Job work - piece rate basis

[BAL KRISHAN GARG]

Sir, Ser.Tax Dept.has issued a show cause notice undated received by my client A on 30/09/09 by speed post in which dept.blaimed that A have intentionally and willfully suppressed the fact of rendering taxable serviced to B. Brief Facts : A is doing Job of Powder Coated Paints on Geysers and Blades of B in B's Premises alongwith his labour and painted goods is either used in the final product or sold by B but only after payment of duty .Dept.stated that during AGCR AUDIT the observation of the auditors that it is a case of labour supply hence they issued a notice calling the specific details from A . A has submitted all the details asked for i.e.copy of ledger ,Form -16 A ,Bank Statement ,Copy of ITR's and Copy of Bills raised during 3 YEARS. BILLS was printed as 'JOB WORK ONLY ' and the payment was also made only after completion of painting pieces and confirmation from the quality department only.A has never supplied labour for various manufacturing activities for B as stated in the notice but he alongwith his labour done the specific jobs.A has submitted all the details asked by the AC and appeared personally as required . My question is that whether it is a case of labour supply when B has given specific job to A .B has also submitted his reply to AC that he has given specific job to A on piece rate basis only. Later on the AC has also writter a letter to his authority stating that it is a case of Job Work and not a case of Labour Supply unofficially seen by the consultant (myself). Now he is blaiming and issued a show cause notice which is undated ? they also demanded for four year 05-06 ,06 -07 ,07-08 and 08-09 u/s 73 (1) when A has not mislead any information from the dept. ? I will be highly oblidged if any one can give clarification on the issue arise . Thanking You , BAL KRISHAN GARG my e-mail id : [email protected]

AI Summary

Client Challenges Show Cause Notice Alleging Tax Suppression; Argues Powder-Coated Painting is Job Work, Not Labor Supply A client received a show cause notice from the Service Tax Department, alleging intentional suppression of taxable services provided to another party. The client performed powder-coated painting jobs on a piece-rate basis at the other party's premises, with all transactions documented as 'job work only.' The department's audit suggested the case involved labor supply, prompting the notice. The client submitted all requested documentation and appeared before authorities, arguing it was job work, not labor supply. A consultant noted that an authority unofficially acknowledged it as job work. The reply advised careful response to the notice and suggested seeking further clarification through RTI.