TaxTMI 
TaxTMI 
Branded shoe owner supplies raw materials, components, packing box for manufacturing and packing finished shoes to us on job work basis. The shoes are below the value of Rs.500/-. Is there any Service tax liability upon us for carrying out such activity.
Service tax on Job Work
20 Jul 2012 
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Service tax on job work: manufacture classification and threshold determine liability, with Cenvat credit reversal implications.
Liability for service tax on job-work in footwear depends on the taxable turnover threshold and whether the processes qualify as processes amounting to manufacture; if excise law treats the process as manufacture (even if excise duty is exempted) it falls in the negative list and service tax may not be leviable. If Cenvat credit is availed, reversal rules apply requiring specified reversal or payment under the prescribed formula. (AI Summary)
Liability for service tax on job-work in footwear depends on the taxable turnover threshold and whether the processes qualify as processes amounting to manufacture; if excise law treats the process as manufacture (even if excise duty is exempted) it falls in the negative list and service tax may not be leviable. If Cenvat credit is availed, reversal rules apply requiring specified reversal or payment under the prescribed formula. (AI Summary)