Service tax on works contract

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Nitin Vaid

Others

20 Points Posted on 25 December 2013

Hello All!,

I have a query regarding service tax on works contract w.r.t. our garment export pvt ltd co. Herein we are manufacturing ready made garments only for export, hence not covered in Excise. We get the garments manufactured in house as well as give it to tailors outside our factory. They take the fabric and stitch and return back the garment, thereby raisng an invoice.

I will apprecaite an opinion whether this will come under works contract or job work wherein it will attract service tax under reverse charge. It can be called a job work which amounts to manufacture but there is no excise being paid.

Please advise.

Thanks,

Nitin Vaid

Replies (3)

CA Ankit Mittal

Charterd Accountant

20 Points Posted on 25 December 2013

Nitin,

The stitching of fabric and returning it back amounts to Job Work and not Works Contract in my opinion as they are not transferring any material owned by them in the course of stitching.

The manufacturer for the purpose of Excise in this case is the Job Worker himself and not the company.

Nitin Vaid

Others

20 Points Posted on 26 December 2013

Thank you Ankit for your view on this matter. Please also let me know if the same work is being done in my premises. Wherein the tailor does the stitching on machines and fabric provided by me, inhouse and raises bill on per piece basis. In this situation can it be covered under works contract? If so what is the service tax implication on this.

Mahipal Jain

Accountant

20 Points Posted on 26 December 2013

My firm name is XYZ , It is a proprietorship firm/HUF . My
firm is doing stiching and printing work at closely held limited
company . My Firm is raising monthly bills towards stiching and
printing work , and company is making payment after deducting TDS .

Please let me know is there any service tax liability either on mr or
on company , company is registered at Excise Department and is paying
excise duty on its product.

My firm is also doing loading and unloading work in another public
limited company My Firm is raising monthly bills towards loading ,
and company is making payment after deducting TDS .

Please let me know is there any service tax liability either on me or
on company , company is registered at Excise Department and is paying
excise duty on its product.