Is service tax is applicable on job work

This query is : Open

seema (Querist)
Follow

25 September 2013 Hello
My client is doing job work. (stitching of garments) He receive material from manufacture and sometime purchase from market as per specification of manufacture then do stitching and other work and send them to manufacture. Sometime he also put label as per manufacture requirement. He receive his job work charges from manufacture.
My queries are
1 Is there any excise duty liability on my client or excise duty liability on manufacturer.
2 Is there any service tax liability? If yes then who will collect the service tax and on what amount?

CA Abhishek Malpani

CA Abhishek Malpani (Expert)
Follow

25 September 2013 Service Tax:

1. When the process of stitching is amounting to manufacture as per Sec 2(f) of Central excise act, then no service tax would be applicable as said process would be covered in negative liast entry.

2. In case, process doesnt amount to manufacture but appropriate duty of excise paid by principal manufacturer of final goods, then intermediate products processed by the job-worker would be exempt from service tax as per entry no 30 of notification 30/2012-ST. If the principal manufacturer is not liable to pay any duty then the exemption under entry 30 will not be available and service tax would be applicable & job worker needs to charge service tax.

Central Excise:

As per notification 214/86 -CE, job-worker is exempt from payment of excise duty when the principal manufacturer discharge duty liability.
For detail understanding, kindly refer the notification.

Message likes : 3 times

seema

seema (Querist)
Follow

25 September 2013 Thank you sir
As per my view:
The stitching process is amount to manufacture because the new product comes in existence.
As per my knowledge there is exemption of excise duty on readymade garments whether they are branded or not.
Textile processing is out of service tax as per negative list of service tax.
Now It is correct that there is no Excise Duty nor the Service Tax on doing job work of stitching readymade garments.

Message likes : 2 times

CA Abhishek Malpani

CA Abhishek Malpani (Expert)
Follow

25 September 2013 Yes. Neither service tax nor excise duty liable.

Message likes : 1 times

seema

seema (Querist)
Follow

15 October 2013 hello sir
Please let me know is there any liability of VAT and CST?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now