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Seeking clarity on job work

Prodip Das (xx) (427 Points)

11 January 2013

Friends,

I have little doubts on applicability of Service Tax on below situation:

A Company buys MS metal products for its trading sale as well uses the same item in manufacturing and do manufacturing sale. To strengthen the item ( MS Metal) the company often requires to get heat treatment on that MS Metal as job work from different vendors.

My question is that whether service tax would be applicable on job work for doing heat treatment if that item is sale by the company as:

a) Trading Sale.

b) Manufacturing Sale

Or does there Notification no 25/2012 dt 20.06.12 applicable as exemption (30 (c):- For carrying out an itermediate production process as job work in relation to any goods on which appropriate duty is payable by the principal manufactuer) in case of manufacturing sale.

Soliciting your expert opinion in this regard..

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4 Replies

Vikas (CA) (1135 Points)
Replied 11 January 2013

In my opinion, you are correct in considering the option (c), i.e., if your principal manufacturer is paying excise duty on the total assessable value, then you would be exmept from Service Tax.

But be sure to confirm it that your principal manufacturer is discharging duty on the manufacture of the said goods.

If the principal manufacturer is not paying the same, then you would be approporately falling under the Point No.30(d) of the Exemption Notification, meaning upto a turnover limit of Rs.150 Lakhs in the curent, no service tax would be payable; provided your turnover in the preceding financial year is less than Rs.150 Lakhs.

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Prodip Das (xx) (427 Points)
Replied 12 January 2013

Dear Vikash,

I think as per notification 25/2012 point no. 30 (d): Exemption is applicable for process of cycles or sewing machines upto an aggregate value of taxable service of the specified process 150lakhs ruppes.

However in my case the company doesn't belong to the above category. So how 30(d) is applicable?

Vikas (CA) (1135 Points)
Replied 15 January 2013

Kindly find the below extract of Notification No.25/2012-ST; Point No.30(d)-

"processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of parts of cycles or sewing machines upto an aggregate value of taxable service of the specified processes of one hundred and fifty lakh rupees in a financial year subject to the condition that such aggregate value had not exceeded one hundred and fifty lakh rupees during the preceding financial year;"

Kindly revert back in case you need any other clarification...