12 September 2016
Where the processing undertaken by the job worker does not amount to manufacture, the said job worker could be liable to service tax
Where the processing amounts to manufacture, the same would not be taxable under service tax under under notification 8/2005 ST where the goods after processing are returned to the principal for use in or in relation to manufacture of dutiable goods which are cleared on payment of duty of excise.
Even after introduction of negative list, we require to refer rule 2(n) of Cenvat Credit Rules, 2004 for understanding what is job work.
Under Negative list regime, the negative list which contains 17 services which are out of the purview of service tax. As per Section 66D(f) of the Finance Act, 1994 any process amounting to manufacture or production of goods is not taxable service .
Accordingly, it is clear that if the process amounts to manufacture, then no service tax liability arises.
Further what is “Process amounting to manufacture or production of goods”, which is defined under section 65B(40) of act, means,
CAclubindia
