TaxTMI 
TaxTMI 
Job work & Service Tax
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....ob work & Service Tax<br> Query (Issue) Started By: - Srivatsan Krishnamachari Dated:- 30-3-2016 Last Reply Date:- 1-4-2016 Service Tax<br>Got 4 Replies<br>Service Tax<br>Dear Experts, I need clarification on one issue. X company is doing job work for Y company, where Y company is paying excise duty on the total material value. Where as X company is not paying any service tax on the job work done....
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..... Since Y company is paying excise duty on the total value of the material, is it essential to pay service tax by X company? Kindly clarify Srinivas Reply By KASTURI SETHI: The Reply: Sir, No ST is to be paid as CE duty stands paid. Reply By Ganeshan Kalyani: The Reply: Sir, You are paying Excise Duty it means the activity carried out by company X is a manufacturing activity and thus service....
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.... tax is not applicable. Either service tax or excise duty is leviable depend upon the nature of activity/ process carried out by Job worker. Thanks. Reply By Rajagopalan Ranganathan: The Reply: Sir, Situation: -I If the process undertaken by the job worker, namely company X amounts to manufacture under Section 2 (f) of Central Excise Act, 1944, then X has to pay duty on the product manufactur....
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....ed by him. The duty amount paid by X can be taken as credit by Y company and an utilize the same for payment of duty on the final product manufactured by Y. If Y company avails Notification No. 214/86-CE dated 25.3.1986, then Y company can take the credit of duty paid on the raw materials which is transfered to the job worker for further processing and Y company can get back the processed raw mate....
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....rial without payment of duty from X. For this purpose Y company has to follw the procedure mandated by Notification No. 214/86. Situation: -II If the process undertaken by X company as job worker does not amount to manufacture, then X company has to pay service tax on the gross value charged by X company. This service tax paid by X company can be availed as input service credit by Y company. Ho....
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....wever, as per Sl. No. 30 (c) of Notification No. 25/2012-ST dated 20.6.2012 (with effect from 1.7.2012) as amended "carrying out an intermediate production process as job work (by X company) in relation to any goods excluding alcoholic liquors for human consumption, on which appropriate duty is payable by the principal manufacturer (Y company). Reply By KASTURI SETHI: The Reply: Agree with ....
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....Sh. Rajagopalan Ranganathan, Sir.<br> Discussion Forum - Knowledge Sharing ....