Service tax on processing of job and reverse charges

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This query is : Resolved

Girish Limbachiya (Querist)

17 July 2013 we have textile weaving unit. we have contractor who doing job work for processing in our premises on piece rate bases with help of his 10-15 persons and raising us monthly invoice for job work.

In this case service tax on job work or Reverse charges of Service tax is applicable to us ?

Arun Kumar Singh

Arun Kumar Singh (Expert)

17 July 2013 If you have appoint these person on the basis of work contract and made the contract on paper form then you are liable to pay service tax under work contract under reverse charge system. If you have send the goods on challan to another premises for jobwork then it will be exempt from service tax under mega exemption notification no. 25/2012-ST.

Ganeshbabu K

Ganeshbabu K (Expert)

17 July 2013 1)Textile processing is not subject to service tax and hence service tax should not apply.

2)Sr No. 30(a) of Notification No. 25/2012-ST dated 20-6-2012 effective from 1-7-2012.

3)

(i)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.

(ii)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.

Thanks & regards
Ganesh babu k

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