Service tax on job work on piece rate basis

[Vinay Sharma]

Dear Sir,

We are an Auto Parts Manufacturing company. We are paying excise duty on all our products. We are getting some inhouse  job work done on our components on piece rate basis from a contractors. Contractor supplies laour for the job work at our plant and raises bill on piece rate basis.

The contractor is chargeing service tax on his bill @ 3.09% and balance is paid by us under reverse charge method.He claims that it is case of manpower supply. 

We want to know if we can ask the contractor not to charge service tax as per sl. no.30 of mega exemption notification isuued in June 2012. This is a case of job work and not manpower supply. Please advise.

AI Summary

Auto Parts Firm Challenges Service Tax on Job Work; Seeks Exemption Under Notification 25/2012 Serial No. 30. An auto parts manufacturing company is questioning the applicability of service tax on job work performed on a piece rate basis by a contractor. The contractor claims the service falls under manpower supply and charges service tax, with the company paying the balance under reverse charge. The company seeks clarification on whether they can avoid this charge under the mega exemption notification 25/2012, specifically serial no. 30, which exempts service tax on job work related to goods where appropriate duty is paid by the principal manufacturer. Respondents agree that if the duty is paid, service tax should be exempt under this notification.