Service tax applicability

Nilesh

If the activity amounts to manufacture as per excise law then there is no service tax, as you have rightly pointed out. If not there is service tax. You may have to examine the centarl excise tariff to find out if the activity is classified as manufacture. If not, it will fall within the category of business auxiliary service. This is my opinion.

Regards,

If the process carried out amouts to manufacture or production of goods, then certainly the same is covered under Negative List. The same process can not be subjected to excise duty and service tax, which are mutually exclusive.

However, seems that your client may be engaged in intermediate production process as job worker. If so, then the Entry No.30(c) of Mega Exempion N/N - 25/2012 might be relevant.

30. Carrying out an intermediate production process as job work in relation to -

1. agriculture, printing or textile processing;
2. cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise Tariff Act ,1985 (5 of 1986);
3. any goods on which appropriate duty is payable by the principal manufacturer; or
4. processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of  parts of  cycles or sewing machines upto an aggregate value of taxable service of the specified processes of  one hundred and fifty lakh rupees in a financial year subject to the condition that such aggregate value had not exceeded  one hundred and fifty lakh rupees during the preceding financial year;

2(b) “appropriate duty” means duty payable on manufacture or production under a Central Act or a State Act, but shall not include ‘Nil’ rate of duty or duty wholly exempt;