Service tax liability

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 November 2014 We are a manufacturer of sheet metal work and we have registered in excise.

We have done the job work in our factory by a contactor.

Contactor has raised the invoice to us without charging the service tax in your invoice.

please tell us, in this case what is our liability of service or not.

Regrads
Lokesh thakur
09211900700.

CA Ravi Kumar Murugesh

CA Ravi Kumar Murugesh (Expert)
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19 November 2014 The primary responsibility of collection and remittance of service tax is on service provider unless it is covered under reverse charge mechanism.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

19 November 2014 Sir, Jow work has been made in our factory by contractor

Querist : Anonymous

Querist : Anonymous (Querist)

19 November 2014 After completion of Job work we will sale the same and paid excise than why we should paid service tax and excise on same item

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 Great question, Lokesh! Let me clarify the service tax and excise duties involved in your job work scenario.

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### Your situation:

* You are a manufacturer registered under **Excise Duty**.
* You outsourced some **job work** (sheet metal work) to a contractor.
* The contractor invoiced you **without charging service tax**.
* You want to know if you have any **service tax liability**.
* You also want to understand the relationship between **service tax on job work** and **excise duty on finished goods**.

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### Key Points:

#### 1. **Service Tax Liability on Job Work**

* Normally, the **service provider (contractor doing the job work)** is liable to charge and pay service tax on job work services.
* However, if job work services fall under **Reverse Charge Mechanism (RCM)**, the **recipient (you)** must pay service tax.
* For manufacturing job work, generally, the contractor charges service tax on the job work service.
* If the contractor did **not charge service tax**, first confirm if the service falls under RCM or if contractor was exempt/not registered.

#### 2. **Your Liability**

* If the contractor has not charged service tax but you are required to pay under **RCM**, you are liable to pay service tax on the value of job work service received.
* If the contractor is registered and liable to pay service tax, then they must collect and remit it.
* If unregistered, and the job work is taxable, then you may have to pay tax under RCM and get registered yourself.

#### 3. **Service Tax and Excise Duty Both Apply**

* Service tax is levied on the **service of job work**.
* Excise duty is levied on the **manufactured goods**.
* Both taxes can apply simultaneously because they tax **different events**:

* Service tax on service rendered (job work).
* Excise on manufacture/sale of goods.
* Paying excise duty on the final product does **not exempt you from service tax on job work**.

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### Summary Table:

| Aspect | Responsibility | Notes |
| -------------------------------------- | --------------------------------------------- | ------------------------------------------- |
| Service tax on job work | Service provider (contractor) | Unless covered under RCM |
| If contractor not charging service tax | Check if RCM applies; recipient (you) may pay | You may need to register and pay under RCM |
| Excise duty on finished goods | Manufacturer (you) | Separate tax on goods manufactured and sold |
| Both service tax and excise duty | Both can apply independently | Different tax bases: service vs. goods |

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### What you should do:

1. **Confirm if contractor is registered and charging service tax** correctly.
2. **Verify if job work service falls under RCM** for you.
3. If yes, **register under service tax and pay tax on job work service received**.
4. Maintain proper documentation to avoid penalties.
5. Excise duty on finished goods is independent; continue paying as per law.

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If you want, I can help you draft communication to the contractor or assist with service tax registration under RCM. Would you like that?

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