service tax on Job work

1.      Job work

1.1.     Meaning of Job work:

 As per section 2(n) of Cenvat Credit rules, 2004, “job work" means processing or working upon of raw material or semi-finished goods supplied to the job worker, so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for aforesaid process and the expression "job worker" shall be construed accordingly.

1.2.     Negative list entry:

As per section 66D(f) of Act, any process amounting to manufacture or production of goods is not taxable service. Accordingly, if ant job work carried out which amounts to manufacture or production of goods; in such case such activity would be exempt from service tax.
“Process amounting to manufacture or production of goods” (section 65B(40) of act) means a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 or any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act for the time being in force.

1.3.     Mega Exemption Notification

Exemption to job work under mega exemption notification no. 25/2012-ST, dated 20.6.2012: Following activities carrying out an intermediate production process as job work would be exempt from service tax:

(a)     Job work in relation to agriculture, printing or textile processing;
(b)     Job work of diamonds and gemstones: Job work in relation to cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise Tariff Act ,1985;
(c)     Job work on goods liable for Excise duty: Job work in relation of any goods on which appropriate duty is payable by the principal manufacturer. ((1) Appropriate duty means duty payable on manufacture or production under a Central Act or a State Act, but shall not include ‘Nil’ rate of duty or duty wholly exempt. (2) Principal manufacturer means any person who gets goods manufactured or processed on  his account from another person)
(d)    Job work on parts of cycle or sewing machines up to Rs. 150 lacs: Job work in relation of 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.

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