Liability and category of service tax, Service Tax

[sunil mehta]

A dealer of glass (plain glass & mirror glass) makes designs on glass (as per requirement of end user) and then sells them to customers after cutting them as per their order.The work of 'making designs on glass sheets' is entrusted to outside person.(jobworker).The jobworker engaged in 'putting designs ' on glass sheets gives some chemical treatment to glass sheets before it is ready for delivery to the dealer.He uses his own labour and premises for such jobwork.The jobworker gets labour charges fron the dealer. Query:- 1)whether job work (labour charges) income of jobworker is liable to service tax? 2)If yes,then under which category ? 3)Is the process of 'putting designs on glass called 'manufacture' under C.Excise? 3)Whether dealer who sells glass sheets(after 'putting designs) to ultmate customers is any way covered under C.Excise or S.Tax?

Posts / Replies

[madhavvan]

At the outset would like to highlight the issue that the activity as mentioned in your mail is in nature of job work not amounting to manufacture hence not liable to excise duty (as there is no new article which is being created at job workers end ) Application of Service Tax. 1) Job work is exempt from provisions of service tax on satisfaction of following conditions: (a)such goods are produced / processed from the raw-material or semi finished goods supplied by the client and (b) goods so produced / processed are returned back to the said client for use in relation to manufacture of any other goods falling under the first schedule to the central excise tariff act on which appropriate duty of excise is payable. However the final products shall not have nil rate of duty or exempt from duty of excise. (after dispatching from job workers the activity at dealers end will not amount to manufacture as he does not satisfy the test of manufacture which is essential for levy of excise duty and hence he will not be liable for excise duty) therefore to conclude based on above facts the job worker will be liable for service tax @10.30% for which the delaer cannot calim credit as he is carrying on activity of selling exempted goods Service tax Notification nos relevant No. Not 8/2005 dated 1st March 2005 amended vide not no 19/2005 dated 7/06/2005 and excise Notification 214/86 25/03/86.

[madhavvan]

mr mehta are you ok with the reply thanks madhavvan

[Rama Krishana]

You may also refer to my reply to the issue id = 1101