F.No. 341/13/2005-TRU, DT. 12/05/2005
- Document type
- Circular
- Reference no.
- F
- Dated
- Category
- Service Tax Circulars-Year 2005
Levy of service tax on certain processes undertaken on job-work basis in relation to manufacture of gem and jewellery
Levy of service tax on certain processes undertaken on job-work basis in relation to manufacture of gem and jewellery
2. In 2004, service tax was imposed on the activity of production of goods on behalf of the client [clause (v) of section 65(19) of Finance Act] under the category of business auxiliary service. However, it was prescribed in the definition of business auxiliary service (section 65(19) of Finance Act) that the activity amounting to manufacture within Central Excise Act, 1944 is not liable to service tax.
3. In Finance Bill, 2005 it is proposed to amend this clause to levy service tax on the activity (not amounting to manufacture) of production or processing of goods for, or on behalf of, the client.. The proposed change in the Finance Bill, 2005 would come into effect only from the date notified by the Central Government after the enactment of the Finance Bill, 2005.
4. Processes outsourced in gem and jewellery sector which amount to manufacture within the scope of section 2(f) of the Central Excise Act, 1944 would not be liable to service tax. Production of goods on behalf of the client is leviable to service tax under business auxiliary service only if such production activity does not amount to manufacture.
Yours faithfully,
(R. Sekar)
Joint Secretary (TRU