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.

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.