Applicability of Service tax on Job Work - Liability of Sub - Contractors

[sunil mehta]

A ltd co gives order to a small contractor M/s XYZ for 'manufacture and supply of precast RCC Louvers and Fins ' (as per spceification given).The contractor (m/S xyz )does not manuacture and supply above precast RCC louvers and fins in normal routine day to day activity.It is only when such order is recd. they mfg. and supply. The raw materials are fully purchased by m/s XYZ. M/s xyz has to manufacture RCC louvers and fins in his own premises and transport it to ltd. company.M/s XYZ fully sublets the labour portion work to 3 small sub-contractors.- A ,B & C Query:- 1)whether M/s XYZ can be called contractors doing manufacturing (on job work basis ) or they can be called pure manufacturers and suppliers?(as they mfg. &supply precast louvers & fins) 2)Whether ser.tax applies on job work if product mfgd. is excisable and no cenvat challans are prepared when raw materials are issued by m/s XYZ to 3 sub contractors? 3)what happens if product mfgd. is not excisable and raw materials are issued by m/s XYZ to 3 sub contractors? 4)whether sub-contractors are liable to service tax -if final product is excisable and --if final product is not excisable?

AI Summary

Determining if XYZ's precast RCC louvers and fins production incurs excise duty or service tax based on manufacturing status. A company orders a contractor, M/s XYZ, to manufacture and supply precast RCC louvers and fins, which is not part of XYZ's routine activities. XYZ purchases raw materials and subcontracts the labor to three smaller contractors. The query addresses whether XYZ is considered a manufacturer or a contractor on a job work basis, and the applicability of service tax if the product is excisable or not. Responses indicate that if the activity is manufacturing, excise duty applies instead of service tax. The nature of the process and final product determines tax liability, with potential exemptions for small service providers.