Jobwork posting

This query is : Resolved

vandana (Querist)
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09 July 2013 Dear All,
can a jobwork party deduct the service tax on jobwork bills?

Party is charging vat, service tax both.

please help me?

MOHAMMAD SALIM

MOHAMMAD SALIM (Expert)
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09 July 2013 Pl give details of job done... If it is a work contract then both VAt and ST applicable... and if SR is Individual ,HUF, partnership firm (incl AOP) and SP is business entity registered as body corporate then it will fall in Reverse Charge and 50% to be deposited by SP and SR....

Ganeshbabu K

Ganeshbabu K (Expert)
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09 July 2013 Applicability of service tax on JOB WORK:-

1)'No service tax is payable by job-workers on processes amounting to manufacture'

2)No service tax if covered in negitive list.

3)'Only job-work that does not amount to manufacture is taxable under service tax law'

Explanation:-

1)No service tax is payable on ‘any process amounting to manufacture or production of goods’ by your job-worker, as that activity falls under the negative list under Section 66D (f) of the Finance Act, 1944.

2)Also, S. No. 30 (c) of notification no.25/2012-ST dated June 20, 2012 exempts ‘carrying out any intermediate production process as job-work in relation to any goods on which appropriate duty is payable by the principal manufacturer’.

3)S. No. 30 also covers certain other activities of job-work.

Thanks & regards
Ganesh babu k

Ganeshbabu K

Ganeshbabu K (Expert)
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09 July 2013 Please refer nature of JOB WORK done and ascertain applicability of service tax.

No service tax applicable if process amounts to manufacture.

1)Though reverse charge applies in case of works contract, reverse charge mechanism is only a mode of collection of service tax. That provision is not a levy of service tax. Thus, if an activity is not leviable to service tax, no service tax would be payable simply because that activity is covered under definition of works contract.

2)Moreover Any process amounting to manufacture or production of goods is not taxable service – Clause (f) of Negative List of services as per section 66D of Finance Act, 1994 introduced w.e.f. 1-7-2012.

The reason is that excise duty is payable if activity is ‘manufacture’.

Thanks & regards
Ganeshbabu k