Service tax on job work

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 August 2012 Dear friends, I am working in pharmaceuticals manufacturing co. We also manufacturer medicines on loan licence basis to third party & raised job work bill for our service charges. In this procedure, third party provide us all the materials & each & everything, we only process the raw material to get the finished goods. My question is this whether service tax will be applicable in this case, because we are doing job work, but on loan licence basis, if yes then from when & which amount ? Waiting for your kind reply at the earliest.

Arun Biyani

Arun Biyani (Expert)
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17 August 2012 Taxability under ST laws is linked with manufacturing status vis-à-vis excisability of the product on which process is carried out .

In short, Job Worker is liable to pay ST only if he doesn’t carry out any mfg process U/s 2(f) or if he does carry out a mfg process U/s 2(f) the product he is making is a non-Excisable. However please note here that Excise includes the excise goods with NIL rate and exempted goods.

Therefore the Service tax would be levied on processes not amounting to manufacture or production of goods carried out by a person.

In your case it would amount to manufacture and hence no service tax would be leviable. However apart from the invoice that you raise for your job charge, you also have to provide seperate Excise invoice to your loan licensee so he gets credit of the Excise.

RENGARAJ R.K

RENGARAJ R.K (Expert)
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17 August 2012 Under the new service tax negative list, it is clarified that the jobworker need not pay service tax if the process amounts to manufacture under Central Excise also under STATE excise.

So, I agree with expert.

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