service tax on labour charges on piece rate basis

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

09 July 2012 Dear Experts

We are a manufacturing unit and receiving labours service from a labour contractors

we are paying service tax on labour charges bill based on labour mendays and overtime hours

some one told us if we pay labour charges on piece rate basis then service tax on labour charges will not be attract

please suggest it is true

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)

09 July 2012 When the contractor is attending job work on piece rate basis then it will not be treated as supply of manpower and it will be treated as job work operation and in that case, contractor will be liable for the dischargement of 100% liability, if otherwise not exempted.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)

09 July 2012 It is exempted if it is a work of carrying out an intermediate production process as job work in relation to -
(a) agriculture, printing or textile processing;
(b) cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise
Tariff Act ,1985 (5 of 1986);
(c) any goods on which appropriate duty is payable by the principal manufacturer;
or
(d) processes of electroplating, zinc plating, anodizing, heat treatment, powder
coating, painting including spray painting or auto black, during the course of
manufacture of parts of cycles or sewing machines upto an aggregate value
of taxable service of the specified processes of one hundred and fifty lakh
rupees in a financial year subject to the condition that such aggregate value
had not exceeded one hundred and fifty lakh rupees during the preceding
financial year;

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