Service Tax Applicability

[shanmukh il]

Dear sir,

 

We are one of watch case and auto components manufacturers in Tumkur, Karnataka.  We required one clarrification on Service Tax frount.

 

We are the manufacturers of watch cases & auto components registered under excise, service tax and KVAT.  Recently we received an job work order from our new customer who is located in Bangalore to supply dental care components.  Customer is only having KVAT & CST registration.  He will give us the raw material through Delivery Challan for manufacturing of  Rings.  We have to manufacture  Rings and deliver the same to him(Bangalore Address) by raising a Jobwork invoice.  After receiving manufactured of Rings by customer(Bangalore Customer), he will export the same  as it is  without opening the same.

 

Our doubt is since Bangalore customer is not having any excise, service tax registration,  is Service Tax is applicable for this issue while raising the Job work invoice from us to Bangalore Customer.

 

Kindly clarrify the same at the earliest.

 

With regards,

 

 

IL Shanmukh
Manager - Commercial,
CENTURA WATCH CASES PVT.LTD.,
No.21-23-24, Sathyamangala Industrial Area,
TUMKUR-572 104.
Tel: 0816 2211105, 2211632
Mob: 9449241971

[YAGAY and SUN]

Such jobwork may come under the taxable Category BAS.  Service tax will be applicable on such transactions.

[shanmukh il]

Dear sir,

Thanks for your kind reply.  But he will export in as it is condition.  Is it applicable Service Tax.

Awaiting your reply.

Regards,

shanmukh

[YAGAY and SUN]

Even in ths scenario service tax will leviable though it may be exempted via refund to your customer who is exporting the goods as such.

[Vijay Chitte]

If jobwork done by you is amouting to manufacure, then service tax is not applicable.

You are make Jobwork invoice.  The banglore customer pay you bill amount after deduction of TDS amount which is you are refunding from income tax dept.

AI Summary

Service tax applicability on jobwork: levy applies though exporter may seek refund or exemption recourse.
Jobwork performed by an excise-registered manufacturer for a customer without service tax registration is treated as a taxable service and service tax is leviable on the jobwork invoice; however, where the recipient exports the finished goods as supplied, the exporter may pursue refund or exemption mechanisms, while an alternative view suggests that if the jobwork constitutes manufacture, service tax may not apply.