Service charge on labour charge

This query is : Resolved 

14 June 2012

Dear Sir
My client have own workshop. He done work like pressing, bending, welding, machining work and some time made some iron tank, small equipements. In all above case all iron sheets and other material like bearing, electrical items supply by party.
1) My client give Job Work Invoice. Is service tax applicable on above work.
2) If service tax applicable, then any limit that after service tax is start.
3) What is percentage on service is applicable.
4)Is any Job Work Invoice Limit per Party by after service tax applicable.

CA CS Amit S. Kedia (Expert)
14 June 2012

Service tax is applicable if the service provided by him in the preceeding financial year exceeds Rs. 10 lakhs.
It is 12.36% at present.
There is no party wise limit as such.

Note: Earlier there was a notification for exemption to job worker but w.e f 01/07/2012 egative list has come into effect and accrdingly all such exemptions were either merged with negative list or withdrawn.


Arun Kumar Singh (Expert)
14 June 2012

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. upto the 10 lakhs no service tax will be applicable. after 10 lakhs 12.36% service tax will be applicable.

CA Nikhil Jhanwar (Expert)
16 June 2012

Agreed with Mr. Arun Kumar Singh..............Further if Such process amount to manufacture then no service tax shall be payable.

CA CS Amit S. Kedia (Expert)
18 June 2012

Dear Mr.M.R.Singh,

The Job Work is exempted since it is carrying out an intermediate production process and the final goods on which appropriate duty is payable by the principal manufacturer.

The concept remains the same in negative list also, whereby mega Block exemption contains the exemption in this regard.

In your case, the Sheets and other materials are supplied by Supplier.You are doing the intermediate process which shall be exempt from service tax.

M.R.SINGH (Querist)
19 June 2012

Dear Kedia Sir
The Job work is exempted if end product is taxable but if product is made for for party self use means the last product is not for sale. Does service tax applicable in this condition.

CA CS Amit S. Kedia (Expert)
19 June 2012

Appropriate duty is payable on production of products and it has nothing to do with sale.
If it amounts to manufacture and not exempt from Duty then you are not liable for service tax.

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