13 June 2013
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’.
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