18 June 2009
Mr. A is engaged in stiching contract with B company exporting rice.The Detail of the contract is as follows: a)All the material and equipment required for the stiching of bags will be of Mr. A. b) B company would pay amount on per bag basis.
Now, total amount of the payment from B exceeds Rs.10lacs in a financial year.Whether A is required to registered with Service Tax , and charge service tax on the billing of stiching to B?
Please substantiate the answer with the mentioning of relevant notification no. and details
18 June 2009
This activity would fall under Business Auxiliary service- production/ processing for or on behalf of the client but excluded as activities of manufacture are not covered and converting cloth into bag is certainly a manufacturing activity. The possible implications on central excise if the value ( including materials) were to exceed Rs. 150 lakhs maybe examined.
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