Service tax clarification on jobworks

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This query is : Resolved

S Venkat Reddy (Querist)

18 December 2013 Dear sir

My client doing jobwork (Chemical raw material received & done the jobwork )Service tax is applicable or not.

Thanking you sir

Venkatreddy

Damodaran

Damodaran (Querist)

18 December 2013 Please provide the broad process of job work

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

24 July 2025 To provide a clear answer on service tax applicability on job work, we need to understand the nature of the job work, particularly in relation to manufacturing and excise treatment. Here's a detailed clarification based on your note:

✅ 1. Job Work Involving Chemical Raw Materials – Service Tax Applicability
Your client receives chemical raw material from another party, performs job work (likely some processing), and returns the processed goods.

🔍 Key Questions for Determining Service Tax Applicability:
Is the job work activity considered manufacturing?

If YES and the processed goods are exciseable, then service tax is exempt under certain notifications.

Is the principal (the person sending raw material) liable to pay excise duty on final product?

If YES, service tax exemption is likely available to the job worker.

Is the process exempt under Notification No. 25/2012-ST, Entry 30(c)?

Job work in relation to goods excluding certain goods like alcohol, petroleum, etc., is exempt if excise duty is payable by the principal manufacturer.

✅ Exemption – Notification 25/2012-ST (Sl. No. 30):
Job work is exempt from service tax if:

The activity amounts to manufacture (as per section 2(f) of Central Excise Act), or

Job work is in relation to:

Agriculture

Printing, textiles, processing of goods on which duty is payable

Intermediate production of goods for use in further manufacturing

👉 If your client is processing chemical raw material that leads to a manufacturing process, and the principal pays excise on the final goods — no service tax is applicable.

⚠️ However, if:
The process does not amount to manufacture, or

The output product is exempt from excise duty, or

The job work is not covered under any exemption notification

👉 Then service tax is payable on the job work charges received.

📌 Summary:
Scenario Service Tax Applicability
Job work amounts to manufacturing and principal pays excise duty ❌ Not Applicable (Exempt)
Job work does not amount to manufacture ✅ Applicable
Job work is in relation to agriculture/textiles/food processing ❌ Not Applicable (Exempt)
Job work for exempted goods or non-excisable goods ✅ Applicable

📄 Documents to Support Exemption:
Job work agreement

Challans for raw material

Manufacturing flowchart

Declaration from principal regarding excise applicability

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