Is service tax applicable?

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Guest

Guest (Querist)

19 November 2012 Dear Sir / Ma'am,

My cousin brother is running a proprietary company in Mumbai (mira road to b precise) & its a job works (meaning the company gets metals from customers & polishes it & sends them back). Now in this entire process they hav to purchase chemicals & water & color for the entire process. He charges 5% VAT on sales & his turnover from July 2012 (date of inception of the company) till date is more then 10 lacs.

My question to you is, whether he shud apply for service tax?

CA Ashwani Agarwal

CA Ashwani Agarwal (Expert)
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19 November 2012 You have to give more details on that? What does he sell?

As he is getting the material from the Client.

Guest

Guest (Querist)

19 November 2012 he gets raw materials like metals for polishing from the clients & after getting the metals polished he gives them back but in this process he has to purchase chemicals, color & water from the purchaser..he charges VAT 5% on sales (which is nothing but the job work done by him for polishing the metals)...hope this clarifies ur doubt. But do let me knw if u need any more info...

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CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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19 November 2012 Service tax on job worker is not applicable if the final product is chargeable to excise duty. Otherwise service tax is to be borne by you once the amount of job work charges exceeds Rs. 10 lakhs. you will get exemption off Rs. 10 lakhs in the first year.

Guest

Guest (Querist)

19 November 2012 Sir, I appreciate ur reply to my query..however, the part tht i didnt get is, tht u hav mentioned tht if the final product is chargeable to excise duty then there wud b no ST. Now since my bro charges VAT on the sales tht he does by 5% is tht applicable too??

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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19 November 2012 Vat is also applicable on work contract. in Maharashtra Mvat on works contract is 5%. Sometime Service tax and Vat both can also be charged like in works contract. They are not exclusive to each other and one is collected by state govt and other goes to central govt.

Guest

Guest (Querist)

19 November 2012 wow!!!!!! thts a lot helpful...so the bottom line is tht ST wont be applicable to my brother in this case since he is already charging 5% VAT & since its a work contract even though the turn over so far has been more then 10 lacs..??

Am i correct, Sir?

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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19 November 2012 No.. Service tax would be applicable. I have not said that it is not applicable. both will be charged by your brother on the bill if the final product is not chargeable to excise duty.
However, you will be entitled to get exemption from ST on first 10 lakhs.

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Guest

Guest (Querist)

19 November 2012 thank u sir, appreciate all ur reply & help in this matter...

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