Service tax on job work on machine

[d.v. gupta]

we are doing job work on machine.the customer come with threads and we by processing turns it into fabric. we are only using needles of machine on our behalf. threads are supplied by the customer. in consideration of this we charge by the customer job charges. is service tax is applicable on us. we are only doing labour work. we are not selling any thing.so kindly let us know whether service tax should be charged or not. if charged under which chapter of service tax act.

[Anish Jain]

yes in my opinion it is covered under Busiess Auxiliary Services. But if the your client is paying duty on its final product. then you need not to charge any service tax otherwise you will have to pay service tax.

[Brijesh Verma]

Dear Mr. Gupta, we gather from the information supplied by you that you are doing job work in relation to textile and textile articles, wherein you receive threads and such other things and thereafter as a result of a series of operations carried out by you either manually or mechanically, the same is converted into fabric. In this regard you are advised to please go through Notification No. 14/2004 dated 10.09.2004 (As amended) which provides 100% exemption to job work in relation to textile items and that too without the condition that such job work must amount to manufacture of excisable goods. So infact the condition that the principal pays duty, doesn't exist under this notification and in my view you would get exemption unconditionally...

AI Summary

Job work exemption: textile job work is exempt from service tax under notification, relieving processors from tax charge. Job work converting customer supplied threads into fabric is addressed: one view classifies it as Business Auxiliary Services and taxable unless the principal pays duty; another notes a notification granting a 100% exemption for textile job work, operative without requiring that the job work amount to manufacture or that the principal pay duty, thereby exempting such job work from service tax.