Levy of service tax

[Guest]

This is with reference to issue no.439. If the facts of the case are same as below but job worker raises the bill for service tax for previous period(s)sumoto without receiving show cause notice from Excise Department. We are the manufacturer of automotible parts. We were getting job work onsome of our parts from outside party. Party was not charging the service tax since last two years on the job work. Now the job worker has received a noticc from excise department for levy of service tax on the total billing of last two years. Now job worker wanted to raise a bill on us for service tax amount. My question is whether we being manufacturer can take the Cenvet on service tax related to previous period(s)

[Madhukar N Hiregange]

First of all only if the process of JW does NOT amount to manufacture would he be liable. If so only a process like pianting, powder coating, electroplating, heat treatment, sand blasting, cutting etc is done then there would be aliability and the same is also exempted for the cusotmers who are paying the excise duty on their final products under not.8/2005. If JW chooses to discahgre the ST then the credit is available to the manufacturer as input servcies used in or in relation to manufacture.

AI Summary

Service tax on job work: manufacturer may claim Cenvat credit if the job worker discharges the tax. Liability for service tax on job work exists only if the job worker's operations do not amount to manufacture; processes like painting, powder coating, electroplating, heat treatment, sand blasting and cutting are taxable services. Such services may be exempt for customers who pay excise duty on the final product under the applicable exemption framework. If the job worker discharges the service tax, the manufacturer may avail Cenvat credit because the service constitutes an input service used in or in relation to manufacture.