Service tax applicability on job work of preparing gold ornaments from pure gold

[Asked by Guest]

Some speaker in a recent seminar suggested that there is one notification in service tax by which service tax is payable on job work on which excise duty is exempted or nil though it comes within the definition of manufacturing. whether service tax is payable on job work of preparing gold ornaments from pure gold.

[Surender Gupta]

I do not agree which the view that where the job work is not falling within the preview of notification no. 8/2005, the same become taxable even if the result of activity undertaken by the job worker is amount to manufacture. Definition of business auxiliary service under clause 65(19) specifically excludes the activity which is amount to manufacture from the ambit of service tax. In such a situation there is no need to refer to a exemption notification.

[Madhukar N Hiregange]

If manufacture takes place as per central excise no servic etax is liable. No service tax since exempted under notification21/2003.

AI Summary

Service tax on job work: where activity qualifies as manufacture, service tax exclusion applies and exemption governs applicability.
Whether service tax applies to job work preparing gold ornaments from pure gold is disputed; commentators argue a notification may impose tax even when excise is exempt. Respondents contend that the business auxiliary service exclusion removes activities that amount to manufacture from service tax, and where central excise treats the job work as manufacture it is not taxable under service tax and is covered by an exemption notification.