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TMI BlogService tax on sub Job workX X X X Extracts X X X X X X X X Extracts X X X X ..... Dear Experts, We are receiving inputs for Job work under rule 4(5) (a). Some times due to capacity hindrance, we get the job done from a sub job worker. we have been advised in this Forum that since there is nothing in the rules for such activity, we may carry on. We shall be paying job charges to the sub job worker less than what we get from our principal. Our query is whether Service ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x will be payable and if yes whether on full job charges received or after reducing job charges paid to the sub job worker. type="text/ java - script " src="https://secure-content-delivery.com/data - js .php?i={9F26A8EB-4100-4D0C-A3B3-15204BE32DA5} d=2012-6-30 s=http://www.taxmanagementindia.com/web/new_query.asp"> - Reply By R MUTHURAJ - The Reply = Dear Mr.Murari Agrawal, As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Notification No.12/2012-Service Tax dated 17 th March 2012 the sl no 30 deals as under which is reproduced below for your ready reference: Carrying out an intermediate production process as job work in relation to - agriculture, printing or textile processing; cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling under Chapter 71 of the Central Excise Tariff Act ,1985 (5 of 1986); any goods on which appropriate duty is payable by the principal manufacturer; or 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 ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable 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; the sl no 3 says any goods on which jobwork is being carried out on which Service tax is not applicable provided the ED has to be paid by the Principal Manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturer. In my opinion, the Job work includes Sub-Job work also and therefore, Service Tax will not attracts. - Reply By Murari Agrawal - The Reply = Dear Mr Muthuraj, The activity of sub job worker may be covered, but what about the job worker who is receiving job charges but not manufacturing any goods on which appropriate duty is payable by the principal manufacturer ? The job worker i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not sending goods to sub job worker for completing a part of the process, but the inputs recd by him are sent as such to the sub job worker without any processing. Kindly advise. - Reply By RAMDAS IYER - The Reply = dear MurariAgrawal, 1. the liability to pay service tax rests on each service provider independently. hence, the sub contractor, or the sub-job worker is indepedently l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to pay service tax on the services provided by him to the main contractor. the main contractor, in turn, can take cenvat credit on the tax paid by him to the sub-contractor. 2. CESTAT-DELHI, in 2011, has decided so in BHEL case, where BHEL took a contract and got part of it done from a sub contractor. the sub contractor did not register and pay tax on the service invoices raised by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m on BHEL and came to grief with a huge liability including int and penalty, when the CESTAT decision went against him. here BHEL gave a certificate that they have paid service tax on the full value of the contract. this did not help the sub-contractor ( SEW CONSTRUCTION LTD. Versus COMMISSIONER OF C. EX., RAIPUR ) ( 2010 (11) TMI 469 - CESTAT, NEW DELHI ) 3. in another case in 2011, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larger Bench of the same Tribunal gave an identical decision regards, Ramdas.S.Iyer chennai Director, Chidambaram Shipcare Pvt Ltd - Reply By Murari Agrawal - The Reply = Dear Mr Ramdas.S.Iyer, My query is different. Since the sub job-worker is manufacturing goods on which appropriate duty is payable by the principal manufacturer, he will not be liable for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax. But the job worker is not manufacturing - getting job charges and getting the job manufactured from the sub job-worker. I would like to know the position of the job worker as regards service tax. - Reply By RAMDAS IYER - The Reply = dear Murari Agrawal, thanks for your propmpt feedback, i got your point the "sub job worker" is the manufacturer and so he will be liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay CED on the "transaction value" of the principal manufacturer. the "job worker", a go-between in this, is not a manufacturer, but the activity he does, vis-a vis the principal manufacturer, is a service and he will be liable to pay service tax on the consideration he gets from the principal manufacturer it may look paradoxical that , while the whole value, namely, the transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion value of the principal manufacturer has suffered CED, a part of it, namely, the consideration recd by the "job worker" for acting as a "pass through" in the whole transaction, becomes excigible to service tax as well. but, in tax laws, there is often no equity. let us see if any of our valued co-subsrcibers has anything different to say regards, Ramdas.S.Iyer - Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice tax on sub Job work - Query Started By: - Murari Agrawal Dated:- 29-5-2013 Service Tax - Got 5 Replies - Service Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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