Service Tax or Excise?

We are in the field of Aluminium Fabrication Work and we are making Aluminium Doors, Windows, Partitions, Glazing and Cladding for the projects like Commercial Complex, Residential, Hotels, Hospitals and Industrials. We are making this products as per our client's requirement and specifications of materials and drawings.

For this kind of activity 1st we get the work contract from our client and than we procure the materials like Aluminium Sections, Glass, Hardware for the project. Than after we making the particular at the site or under our premises. Again to make particular thing we give the job work to labour contrctor.

As on today we are paying 2% work contract tax to state govt. and 2.06% to service tax dept.

So the question is that is this activity is under service tax or excise?

Replies (1)
Hi Dhaval, First, the activity of work contract can be regarded as client-order-specification-manufacturing type. Second, the activity carried on your part results in totally different product which is seperately known in the market as a different product different from its basic raw materials. So, it is marketable in case your work contract gets cancelled. Third, as per your language it could be understood that the actvity of fabricating aluminium works is a business and it is a contineous activity i.e you are professionally into such activity. So, accordingly it should be understod that you are into manufacturing a perticular type of product, be it a work contract or a job contract, both of which are dependent upon the specifications specified by any customer, be it a manufacturing company, contractor, individual etc. Therefore, yours is a clear case of manufacturing activity on which excise is leviable. Moreover, service tax is paid on the services rendered which is a non-manufacturing type. Here you are not providing any services, but inturn you are manufacturing products that are salable in the open market. This is may personal view and is subject to contradictory views. Different opinions are always welcomed. Thanks, Veer

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