Apllicability of Service Tax

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This query is : Resolved

Gaurav Jain (Querist)

25 May 2009 A company is engaged in the business of Metalising (zinc coating mainly of auto parts). the work is done on job work basis. they raise a consolidated bill for the Material and their service Cost. the firm is also registered in the Sales tax and paying sales tax @ 1 % on the sales turnover. the total turnover of the Company is About 25-30 lacs.

Is service tax applicable on this kind of work?

If yes under with service and what will be the rate of service tax?

Madhukar N Hiregange

Madhukar N Hiregange (Expert)

25 May 2009 Liable under BAS - production / proicessing of goods not amounting to manufacture.
On the labour charges part there is a liability.
Options: Avail cenvat credit on raw materials and pay ST on full amount. [ may not be feasable since volume low and excise documents may notbe available]
Avail deduction for materials cost under Not.12/2003 [doumentary proof for same could be an issue]
A possible legal argument couldbe that this is works contract and in WC the entry does not exist. [ to use this argument there shouldbe some case law precedence. which presently is not there]

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Gaurav Jain

Gaurav Jain (Querist)

26 May 2009 thanks for the reply.

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