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January 2016

Clarification w.r.t. Fabrication of Garments Service received by Apparel Exporters

By Pratik Mehta, Brijesh Cholera Chartered Accountants
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Circular No. 190/9/2015-ST dated 15.12.2015

Vide this Circular, CBEC has clarified that the services received by apparel exporters from third party for job work involves a process amounting to manufacture or production of goods, and thus would fall under negative list [section 66D (f)] and hence would not attract service tax. However, CBEC has also clarified that only those job works which involve a process on which duties of excise are leviable u/s. 3 of the Central Excise Act, 1944 would be covered under negative list in terms of Section 66D(f) read with section 65B (40) of the Finance Act, 1994 and hence applicability of service tax may be decided on case to case basis depending upon nature of agreement/contract entered into between service provider & service receiver and the service being provided.

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