Query regarding ready made garment manufacturing

[BRAJESH SRIVASTAVA]

Dear Fellow Members,

Please enlighten me in the following query:-

A proprietorship concern (Prop: Individual) (in Kolkata) is engaged into a business of "Purchasing cloth and get it job worked (for stitching and printing) from various outside job workers (unorganised sector)  for making ready made garments" and selling this ready made garments only to a buyer (in Mumbai) who is exporting the same.

Now my query is:-

a) Whether this conversion amounted to manufacture and accordingly Excise Duty is applicable in this case? If yes, on what amount duty will be calculated, suggest with an example.

b) Is there any liability pertaining to service tax also on account of labour work or job work charges payment? if yes, please brief the process and quantum of service tax and to bear by whom.

c) On purchase of cloth he has to pay VAT. Since this is a case of sale (central sale ) to a buyer who is exporter. whether he is liable to pay CST or is eligible for Form H ? As he has paid input VAT is he eligible to get input VAT refund from the VAT Department, what is the process to get this refund as this would be the regular and only activity in the business.

d) If any other tax laws applicable for this business please let me know.

If any statutory obligation part I had left in my query,please do guide me about that also. 

I hope I have written my query clearly, if there is some missing information you require to know please do get back to me at my mail.

Thanks and Regards

CA Brajesh Kumar Srivastava

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[For R.Tulsian & co. -Shashwat Tulsian]

Hello Brajesh ji

The following is my opinion on your query-

(a) You have not mentioned the type of clothes proposed to be manufactured by job workers. However, what is to be seen is whether after stitching, a new product is created. For example, usually, after stitching, a shirt is created from cloth, so a new product which is marketable is created. If this happens, then MANUFACTURE has taken place. 

You have not mentioned whether the product is branded or unbranded. However, after the amendment by Finance Act, 2013, now both branded and unbranded garments are EXEMPT from excise duty.

However, if exemption is to be sought from excise duty,NO CENVAT credit shall be allowed to be claimed .

(b) If the process of stitching amounts to manufacture, as outlined above, then there is an exemption from service tax for job work process as such process is "leviable" to central excise duty. Therefore, no service tax shall be liable to be paid on job work of stitching.

As for job work of printing, the same is exempt under mega exemption notification of service tax.

(c) VAT not being my subject, i am afriad, i wont be able to help you much with it.

Hope this helps.

Shashwat Tulsian

(for R.Tulsian& co.)

Head office- Kolkata

Branch offices-Siliguri and Gangtok.

[manoja...@gmail.com]

Hello Shashwat ji,

i have one question here i am sure u can help me on that.
I am going to start ready made garment wholesaling like Shirt,T-shirt and jeans as i am new in this field.
i am connected with one manufacture of hydra bad.I wanted to know that currently i have not applied for TIN  no and etc.
so if some of my clients will ask me for bill then what i should do on this question manufacturer tell me that u can give his means manufacturer
bill to customer but i am afraid that if i give his bill to the end client then there is possibility that in future he may direct contact
to manufacturer and give him order directly.
So Please help me as i am new to this what i should do whether i applied for TIN or not.

Thanking You,
Manoj

[laxm...@gmail.com]

This is in reference to the VAT taxability under MVAT for clothing and stiching services provided to customers. Following is our query regarding the same.

1. One of my client having showroom of Curtains. A cloth is sold to the customer and for tailoring of curtains a tailor (third party) is available in the same premises. 

2.Separate billing for cloth and tailoring service is generated. and once payment is received from customers, tailor provides the commission / royalty to us as prescribed from time to time. 

Need to confirm 

1)  both of these sales / services are taxable under MVAT. 

2) Also if we are getting some commission/royalty for reference given to customer. 

Is it liable to MVAT Please provide the relevant notification as per your decision. Early response is highly appreciated. 

Thank you, 

Manish Chugh 

9011068302

laxm...@gmail.com