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2016 (9) TMI 51 - AAR - Service TaxJob-work on contract basis at the premises of manufacturer - exemption from payment of Service Tax - Notification No. 25/2012-ST dated 20.06.2012 - section 66B of the Finance Act, 1994 principal manufacturer - sub-clause 2(Z) of said notification - Notification No. 12/2012-CE (NT) dated 17.03.2012 Held that - As the principal manufacturer is availing benefit of exemption Notification No. 12/2012-CE (NT) dated 17.03.2012 (S. No. 251) on the manufacture of Jute Loom Machine on job work by the applicant, benefit of exemption Notification No. 25/2012-ST dated 20.06.2012, as amended, cannot be extended to the applicant applicant not eligible for exemption ruled against applicant.
Issues: Eligibility for exemption from payment of Service Tax on job work undertaken inside the factory of the manufacturer as per Notification No. 25/2012-ST dated 20.06.2012, as amended.
Analysis: The case involved M/s Sarkar & Sen Company, a labor contractor, intending to perform job work for M/s Nipha Exports (P) Ltd, a manufacturer, at a specified rate per "Jute Loom Machine Assembly." The applicant sought clarification on their eligibility for exemption from Service Tax under Notification No. 25/2012-ST dated 20.06.2012, as amended. The key question was whether the job work undertaken inside the manufacturer's factory qualified for the said exemption. Notification No. 25/2012-ST dated 20.06.2012, as amended, provided an exemption from service tax for carrying out an intermediate production process as job work in relation to goods, excluding alcoholic liquors, on which appropriate duty is payable by the principal manufacturer. The term "principal manufacturer" was defined as a person who gets goods manufactured or processed on his own account from another person. To determine the applicability of the exemption, the Commissioner of Central Excise in-charge of M/s Nipha Exports (P) Ltd confirmed that the manufacturer availed Central Excise duty exemption on the manufacture of "Jute Loom Machine." As the principal manufacturer, M/s Nipha Exports (P) Ltd was benefiting from the exemption under Notification No. 12/2012-CE (NT) dated 17.03.2012 for the manufacture of "Jute Loom Machine." Consequently, the benefit of the exemption under Notification No. 25/2012-ST dated 20.06.2012, as amended, could not be extended to the labor contractor, M/s Sarkar & Sen Company, performing job work for the manufacturer. The ruling concluded that the applicant, M/s Sarkar & Sen Company, was not eligible for the exemption of Service Tax concerning the job work carried out in the manufacturer's factory in line with Notification No. 25/2012-ST dated 20.06.2012, as amended. The decision was based on the understanding that the principal manufacturer's exemption from Central Excise duty on the manufactured goods precluded the labor contractor from availing the service tax exemption under the specified notification.
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