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Does it attracts Service Tax

satish r (student) (91 Points)

21 December 2010

We are cnc machining carrying on a orders from the parties, the parties supplies us the raw-material and also a specifications. We carry on the process by using the raw-material supplied by them and convert them in to a finished output as per their specification's provided. Here we are only doing the process which involves the labour. At final stage we raise a invoice only for labour charges which shown under KVAT-100 returns. Does this process attracts SERVICE TAX.... ????

Please help.

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3 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 21 December 2010

65(19)“business auxiliary service” means any service in relation to, —

iv)	procurement of goods or services, which are inputs for the client; or
	Explanation.— For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, “inputs” means all goods or services intended for use by the client;
(v)	production or processing of goods for, or on behalf of the client

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Pavan Jain S (Chartered Accountant) (1575 Points)
Replied 22 December 2010

Since you are processing or manufacturing the goods for the client, the same will be taxable under BAS. But, if the same process amounts to manufacture and excise duty is discharged thereon by principal manufacturer, then no service tax is leviable

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 22 December 2010

Originally posted by : satish r
	We are cnc machining carrying on a orders from the parties, the parties supplies us the raw-material and also a specifications. We carry on the process by using the raw-material supplied by them and convert them in to a finished output as per their specification's provided. Here we are only doing the process which involves the labour. At final stage we raise a invoice only for labour charges which shown under KVAT-100 returns. Does this process attracts SERVICE TAX.... ???? Please help.