Service Tax on Job Work

[Ashok Chopra]

Respected Forum,

 

TEN  jobworkers are working and providing me in house service on piece rate basis and raising bill on me. All ten collectively falling within the threshold limit but individually last year they were within the threshold limit and now, TWO of them are crossing threshold limit of Service Tax upto October, 2012,  pls clarify:-

1. Should they apply immediately for Service tax and charge Service Tax on their future bills?

2. What will be the status of the amount which is less than threshold limit and service tax not charged.

3. My jobworkers are unorganized and do not want to get themselves registered.  being service receipant, is it my liability to get them registered and they should charge service tax on their bills.

4. Whether all ten are liable to get themselves registered or only two who have crossed the threshold limit.

 

pls advice

[Guest]

Chopraji,

If your end product is taxable under CETA then no service tax is applicalbe for your job worker irrespective of volume of their business.

Hope it is clear to you, thanking you,

CMA S. Banerjee

9433050121

[Vijay kumar]

Pl explain what is "inhouse service on piece rate basis". Do u mean manpower supply service is provided within ur factory. If that be the case, w.e.f. 1.7.2012, this service is under partial reverse charge, which is attracted under Nofn.30/2012-ST, provided the service provider is individual, HUF, partnership firm and ur company is body corporate. Prior to the said date, MRS was taxable without any reverse charge. If it is not manpower supply but processing of raw material supplied by you (BAS), above answer replies ur query. So, pl explain the nature of service rendered by the jobworkers.

[Ashok Chopra]

Mr. Vinay,

job workers are processing our raw material on piece rate basis. not man power supply

[Guest]

Mr. Ashok.

Mr. Sambu's answer is correct.

Rama Kishan

 

[Vijay kumar]

Any process amounting to manufacture under Section 2(f) of the CEA, 1944 is in the negative list under service tax. If process does not amount to manufacture or production of goods, and is further not covered in clause 30 of the mega notification, the same is liable to service tax. In your case, pl check if the final product is suffering duty. If so, there is no need to pay service tax by the job workers, irrespective of their turnover. Otherwise, the two persons who have crossed (not all the ten) the threshold limit have to get themselves registered (and not you) and pay the tax, on which cenvat credit will be available to you.

[Ashok Chopra]

Dear Mr.Vinay,

 

thanks, we are 100% EOU, physically duty is not paid on final product

[NK SHETE]

I do agree with vijay kumar's views on 07.11.2012 and 09.112012.

The point to be considered is whether the job worker is engaged in manpower supply  which  is not placed operationally under the superintendence or control of the recipient, it shall not be a case of manpower supply. 

The definition of Man power supply is provided in Rule 2(g) of Service Tax Rules, 1994 may please be adhered to. This will preclude any further litigation.

AI Summary

Service tax on job work: tax applies unless processing amounts to manufacture and the final product is dutiable. Processing by job workers that amounts to manufacture or production of goods is excluded from service tax; if the final product is dutiable, job work services are not taxable regardless of turnover. If processing does not amount to manufacture and is not otherwise excluded, individual job workers who cross the registration threshold must register and pay service tax. Where the service is manpower supply to a body corporate by individuals/HUF/partnerships, the partial reverse charge mechanism may apply and the recipient can claim cenvat credit.