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Regarding negative list of service tax

CA Darshak Shah (Practicing CA) (1889 Points)

06 July 2012

One of my client is engaged into job work of engineering goods..

As per the notifications number 25/202, the negative list (point no-30), there are 4 job work services which are exempt...

In that there is point no-c, which states that

Any goods on which appropriate duty is payable by the principal manufacturer( are exempt from service tax)...

Please elaborate the same...

Does it mean reverse charge provisions or any other way around...?

Thus job work on engineering goods are taxable or not?

Please Respond to my query....

Best Regards

CA Darshak Shah

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6 Replies

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 07 July 2012

By using the word appropriate duty, CBEC meant to say excise duty and not anything else. Also if you refer the erstwhile Business Auxiliary service, there was the same clause which says that if the manufacturer has paid excise duty on the final product,then for processing the said product there is no requirement to charge service tax by the job worker. This was on the ground that if excise duty is applicable on a transaction, there cannot be a service component on the same. Hope it is clear to you now.

CA Darshak Shah (Practicing CA) (1889 Points)
Replied 07 July 2012

Ajit Sir...Thank you vary much...

It is clear to me now...

That means if principal manufacturer pays excise duty that means job worker is not supposed to charge service tax.....

Am I right sir?

And

In case manufacturer doesnt pay excise, than for registration in service tax and exemption limit of 9 and 10 Lacs should be calculated from which date?

Unit was existing but service tax is now chargable...So it is confusing me...

Hoping for help.....

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 07 July 2012

yes you are have got it correct. For the exemption limit you will take the turnover of taxable services and not exempted ones. Now base don the above discussion, you can easily identify that when it is considered as taxable and when exempted and once the taxable turnover crosses Rs 10lac liability will arise.

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