Eligibility and applicability of service tax and excise, Service Tax

[Kumar Swam]

This is regarding Business Auxiliary Service - Job work - Labour charges - is it eligible for manufacturer under excise or service tax liability. One person doing job work to his manufacturing client - by doing laser cutting (various desings) of metal sheet supplied by the manufacturer and sending back the material and waste to the respective customer. He is charge only labour charges for cutting of metal sheet. Please clarrify this activity (cutting of metal sheet according to customer design) belongs to manufacture or service tax will apply on this activity after crossing 10 lakhs

Posts / Replies

[Rama Krishana]

You need to ascertain two situations: (i) whether the principal is payment excise duty or not (ii) what is the nature of activity undertaken by the job worker - is it manufacturing activity? if the answer to first situation is yes, manufacturer is payment central excise duty, job worker is not required to pay any service tax under BAS. On the other side, if the activity undertaken by the job Worker is in the nature of manufacturing activity, again the job worker is not required to pay any service tax. Barring these two situations, job worker is required to pay service tax on the job working activity.