Eligibility of service tax to HAL

[Asked by Guest]

Dear All,

We are manufacturers of rubber parts.  We doing job works to HAL. Let me know, Is HAL has any exemption in payment of service tax? If so what is the notification No.?

Secondly we also claiming from our 2 or 3 customers the development charge.  Is we have to pay service tax for this development charge? Kindly clarify.

[rajkumar shukla]

The query is not clear.Mere job work can not decide whether it is subjected to service tax or not. if the process employed by you does not result into coming into existence a new and identifiable product  which is also excisable, you may be subject to service tax.Otherwise it may be a case of central excise jobwork wherein goods are supplied on simple challans and no duty is paid as per Notification 214/86.

 if you are developing tools , you may be subject to excise duty and value of development is includible in a/vlue.

AI Summary

Service tax liability on job work depends on whether the process creates a new excisable product; development charges may attract excise.
Liability to service tax for job work depends on whether the process creates a new and identifiable excisable product; absent such creation the activity may attract service tax, whereas processes producing excisable goods may fall under central excise jobwork principles as exemplified by Notification 214/86. Charges for development of tools may be subject to excise, with the development value includible in the assessable value.