Job Work from Sister Concern

[Mridul Sethi]

Sir,

We 2 Manufacturing Sister Concerns having units in Punjab & Haryana with same name. If we do job work from each other, then are we liable to pay service tax or not. Also if we are liable to pay service tax, then threshold limit of service tax will be considered or not, if the manufacturing unit is LTU.

[YAGAY andSUN]

If you are paying duty on final products then there is no requirement to pay the service tax as mentioned in the Mega Notification.

[Vijay kumar]

If after job work, the finished goods suffer excise duty at the other end, there is no need to pay service tax by either unit. You may follow the procedure prescribed under Nofn.214/86-CE. If not, liability under service tax arises. As regards threshold limit, if the company is same or LTU, the threshold limit applies only once, in terms of Notification no..33/2012-ST.

AI Summary

Job work service tax liability depends on excise duty treatment; duty on finished goods generally negates service tax obligation. Job work between sister manufacturing units does not attract service tax where the finished goods after job work are subject to excise duty or duty is paid on the final products; in such cases the Mega Notification exempts service tax and the prescribed job work procedure should be followed. If excise treatment is not established, service tax liability arises. The service tax threshold applies once for the enterprise or LTU when units constitute the same taxpayer, so threshold compliance is assessed at the single entity level.