If the job work carried out by you does not amount to manufacture and excise duty is payable by the manufacturer, for whom job work is carried out then, service tax is payable by you on such job charges amd would be rightly covered under Business Auxiliary services.
However if goods are complete in nature and requires no further processing then it amounts to manufactaure and service tax is not payable as excise duty becomes payable
Production or processing of goods for, or on behalf of, the client; or [This clause was inserted w.e.f. 10-9-2004. It was amended w.e.f. 16-6-2005. Words during the period 10-9-2004 upto 16-6-2005 were -‘production of goods on behalf of the client’]
Job work comes under section 65(19)(v) of definition of ‘Business Auxiliary Service’ which reads as ‘production or processing of goods for, or on behalf of, the client’. Thus, job work is liable to service tax w.e.f. 16-6-2005. However, if job work done amounts to ‘manufacture’, it is not taxable since activity amounting to ‘manufacture’ has been specifically excluded from definition of ‘Business Auxiliary Service’. There is no condition that excise duty should be paid or payable on such goods. As long as the process is ‘manufacture’, it is out of service tax net.
Also refer notification no 8/2005-ST dated 1-3-2005 as amended from time to time since as per exemption notification No. 8/2005-ST dated 1-3-2005, job work is exempt if the goods after job work are returned to raw material supplier who uses it in or in relation to manufacture of excisable goods, on which appropriate duty of excise is payable. Thus, goods sent for job work under Cenvat provisions is exempt from service tax.
You may kindly evaluate your position in the matter.
22 December 2007
what is relevant for service tax purpose is to ascertain whether job work services amount to manufacture or not. If it is so there is no question of service tax. A job worker shall be liable to pay service tax only on the job charges charged by him for the services rendered and not on the total value of goods produced. He can take the exemption for small service providers. He will be out of service tax purview if the final products are subject to excise duty (nil duty). In other words if the manufacturer of final products is paying duty then no service tax payable by the job worker
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