Works contract taxation requires choosing between composition or normal scheme, determining eligibility for input tax credit.
Job work processing of client-supplied goods returned for further manufacture is exempt from service tax when final products at the client attract excise duty; job workers cannot claim Cenvat. Where the contractor purchases paint and effects coating the activity is a works contract attracting service tax registration and a contract-specific election between composition (no input credit) and normal scheme (input and capital goods credit available). VAT treatment similarly allows either a standard-deduction with full input setoff or a works contract composition with limited setoff. (AI Summary)