Applicability of Service Tax on Jobwork on goods exported.

[Asked by Guest]

if an individual undertakes a jobwork on behalf of other individual and the goods are exported whether service tax is applicable

[Surender Gupta]

Your query is not clear. Who wants to avail the exemption? In this particular issue it appears that the Principal is exporting the goods on which certain processes undertaken by the Job Worker. In service tax, there is no provision which enable the job worker to avail the benefit of exemption on the strength that the goods have been exported ultimately.

No service tax is payable on ‘any process amounting to manufacture or production of goods’ by your job-worker, as that activity falls under the negative list under Section 66D (f) of the Finance Act, 1944. Also, S. No. 30 (c) of notification no 25/2012 dated June 20, 2012 exempts ‘carrying out any intermediate production process as job-work in relation to any goods on which appropriate duty is payable by the principal manufacturer’. 

If there is NIL duty on export then sevice tax willbe applicable on job work otherwise it will be cover under S.No. 30(c). 

AI Summary

Service tax on jobwork: taxable when the jobworker's process is not excluded and principal pays no applicable duty.
Service tax on jobwork for exported goods hinges on two operative points: processes amounting to manufacture by the job-worker are excluded under the negative list, and an exemption applies to intermediate production processes performed as jobwork when the principal manufacturer is liable to pay appropriate duty. If the principal faces nil duty on export, the jobwork does not qualify for that exemption and service tax may be payable on the job-worker's services.