Textile Processing Job Work

[Anand Shah]

Dear Sir, Our Selves, Anand Textiles situated at Ahmedabad running texile process house and doing job work of textile processing. As per Notification No. 14/2004-ST dt. 10/09/2004, textile processing is exempted under serive tax and hence we are not liable for paying service tax. The SCN is issued to us demanding the service tax of last five years of our gross turn over under the catagory of Business Auxiary Service ( Production of goods on behalf of our Client). Though our nature of work comes under business auxilary services, but as per above mentioned notification textile job work is exempted and hence we are not providing any taxable services. As per the department, this is the audit objection raised by C&AG and hence we have to issue SCN in the form of Protective Demand. Therefore you are requested to guide us in this matter and please give your expert advice on this issue. Thanks Anand Shah

[Sucheta Agrawal]

Dear Mr. Anand Shah,

As per this specified notification your services exempt from paying service tax if in the nature of-

(a)  Procurement of goods or services, which are inputs for the client;

[(b) production or processing of goods for, or on behalf of, the client;]

(c) Provision of service on behalf of the client; or

(d) a service incidental or auxiliary to any activity specified in (a) to (c) above,

[and provided in relation to agriculture, printing, textile processing or education, from the whole of service tax] leviable thereon under section 66 of the said Finance Act:

thus if your service fall in this categorry these are exempt and the detail which you are mentioned in your query shows that your services fall in the exempt notification. thus if demand raised after 5 years then u can raised plea of time bar, because there is no suppression on ur behalf.   

 

AI Summary

Textile processing exemption - Job work for a client is non-taxable; time-bar defence may apply to delayed demands.
Textile processing job work performed for a client is exempt from service tax under the applicable exemptive notification when it constitutes procurement, production or processing for the client or services incidental or auxiliary thereto; a show-cause notice alleging taxability under Business Auxiliary Services must be assessed against that exemption. If a demand is raised after the statutory period and there was no suppression, the taxpayer may raise a time-bar defence even if the demand follows audit observations or is issued as a protective demand.