Applicability of service tax on job work

This query is : Resolved 

16 July 2012

Dear Sir

Accordings to the recent amendments i.e., w.e.f. 01.07.2012 wether service tax is applicable on job work charges , if job worker return the goods to the principal and principal is not liable to pay Excise Duty on that product and sell the goods in the market.

What if, Principal is liable to pay Excise Duty.

17 July 2012

If Principal is liable for excise duty

then no liability of service tax

There is also no service tax liablity if principal is manufacturer and enjoys exemption limit. For e.g. it is a S.S.I. Unit .
In other cases Job worker is liable for
service tax.

17 July 2012

The phrase ‘processes amounting to manufacture or production of goods’ has been defined in section 65B of the Act as a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 (1 of 1944) or any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act. This entry, therefore, covers manufacturing activity carried out on contract or job work basis, which does not involve transfer of title in goods, provided duties of excise are leviable on such processes under the Central Excise Act, 1944 or any of the State Acts.


Service tax would be levied on processes, unless otherwise specified in the negative list, not amounting to manufacture or production of goods carried out by a person for another for consideration.

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