TaxTMI 
TaxTMI 
APPLICABILITY OF SERVICE TAX
BAL KRISHAN GARG
Dear All Members , I have a query regarding applicability of service tax . My Client Mr.A alonghwith his labour was doing Job Work on the Material supplied related to Mr.B in the factory premises of Mr.B on which Mr.B was clearing them after paying of EXCISE DUTY . Here Mr.B is not concerned with the labour or their attendance but he is concerned only with the pieces completed and found ok by his quality department and paid on piece rate basis to Mr.A after deducting TDS . I have already filed reply against SCN issued against Mr.A during November , 2009 . The case was recomended by the auditors of AGCR as they interpreate the work as ' Supply of Labour ' while no relationship between the labour and service receipient as employee-employer and Mr.A was responsible for completing the task on piece rate basis . Moreover Mr.B was the EXCISE PAYING assessee and cleared the goods after paying EXCISE DUTY .Invoice was raised only against ok pieces on piece rate basis and JOB WORK ONLY mentioned on the face of the invoice .It has also been clarified by Mr.B to the Concerned AC in his reply on cross examination . Now the personal hearing has been called by the AC . Whether the concern Official can ignore all the relevent facts of the case on the basis of interpratation drawn by the auditors only and they ignore all the documents given during proceedings before him ? Whether Mr.A has to go for fight up to Tribunal for the case for just bucause concerned AC etc.have not draw their attention to the documents furnished before him and do not want to give him clean chit due to his position ? Thanks to all BAL KRISHAN GARG
Supply of labour classification may determine service tax liability for piece rate job work performed on a principal's premises. Whether a contractor's operations constitute supply of labour for service tax where job work was performed on materials in the principal's factory, payment was on piece rate to the contractor with TDS, invoices were raised only for accepted pieces described as 'job work,' and the principal paid excise duty on cleared goods. The auditors' advice to treat the activity as supply of labour led to a show cause notice despite contractual and documentary evidence of a job work arrangement and no employer employee relationship. (AI Summary)