Spring 2.0.6
JBoss 4.2.2 GA
JDK 6

persistence.xml

<persistence-unit name="analytics" transaction-type="RESOURCE_LOCAL">
 <!--<jta-data-source>java:/@db.datasource.jndi@</jta-data-source>-->
 <non-jta-data-source>java:analyticsDS</non-jta-data-source>
 <properties>
 <property name="hibernate.dialect" value="org.hibernate.dialect.MySQL5Dialect" />
 <property name="hibernate.cache.provider_class" value="org.hibernate.cache.EhCacheProvider" />
 <property name="hibernate.use_second_level_cache" value="true" />
 <property name="hibernate.use_query_cache" value="true" />
 </properties>
 </persistence-unit>

applicationContext.xml

 <import resource="jpaDaoContext.xml" />
 <import resource="servicesContext.xml" />

 <!-- Datasource configuration -->
 <bean id="loanaccounting-jpa-ds" class="org.springframework.jndi.JndiObjectFactoryBean">
 <property name="jndiName" value="java:comp/env/jdbc/analytics" />
 </bean>

 <!-- Entity Manager + JPA Configuration -->
 <bean id="entityManagerFactory"
 class="org.springframework.orm.jpa.LocalContainerEntityManagerFactoryBean">
 <property name="dataSource" ref="loanaccounting-jpa-ds" />
 <property name="persistenceUnitName" value="analytics" />
 <property name="jpaVendorAdapter">
 <bean class="org.springframework.orm.jpa.vendor.HibernateJpaVendorAdapter">
 <property name="database" value="MYSQL"/>
 <property name="generateDdl" value="false"/>
 <property name="showSql" value="false" />
 </bean>
 </property>
 <property name="jpaPropertyMap">
 <props>
 <prop key="hibernate.cache.use_second_level_cache">true</prop>
 <prop key="hibernate.cache.use_query_cache">true</prop>
 <prop key="hibernate.cache.provider_class">org.hibernate.cache.EhCacheProvider</prop>
 <prop key="hibernate.jdbc.batch_size">50</prop>
 <prop key="hibernate.cache.provider_configuration_file_resource_path">ehcache.xml</prop>
 <prop key="hibernate.generate_statistics">true</prop>
 </props>
 </property>
 </bean>

jpaContext.xml

<!-- Transaction manager for a single JPA EntityManagerFactory (alternative to JTA) -->
 <bean id="transactionManager" class="org.springframework.orm.jpa.JpaTransactionManager">
 <property name="entityManagerFactory" ref="entityManagerFactory"/>
 </bean>

 <aop:config>
 <aop:pointcut id="serviceOperation"
 expression="execution(* com.primatics.analytics.service..*.*(..))"/>
 <aop:advisor pointcut-ref="serviceOperation" advice-ref="txAdvice"/>
 </aop:config>

 <tx:advice id="txAdvice" transaction-manager="transactionManager">
 <tx:attributes>
 <tx:method name="get*" read-only="true" propagation="SUPPORTS"/>
 <tx:method name="save*" read-only="false" propagation="REQUIRES_NEW"/>
 <tx:method name="update*" read-only="false" propagation="REQUIRES_NEW"/>
 <tx:method name="insert*" read-only="false" propagation="REQUIRES_NEW"/>
 <tx:method name="create*" read-only="false" propagation="REQUIRES_NEW"/>
 <tx:method name="persist*" read-only="false" propagation="REQUIRES_NEW"/>
 <tx:method name="delete*" read-only="false" propagation="REQUIRES_NEW"/>
 <tx:method name="remove*" read-only="false" propagation="REQUIRES_NEW"/>
 <tx:method name="register*" read-only="false" propagation="REQUIRES_NEW"/>
 </tx:attributes>
 </tx:advice>

 <!-- JPA annotations bean post processor.
 Will inject persistence related resources. -->
 <bean class="org.springframework.orm.jpa.support.PersistenceAnnotationBeanPostProcessor"/>
 <bean class="org.springframework.dao.annotation.PersistenceExceptionTranslationPostProcessor" />
 <bean class="org.springframework.beans.factory.annotation.RequiredAnnotationBeanPostProcessor" />

JBoss server.log snippet

DEBUG [org.hibernate.engine.TwoPhaseLoad] resolving associations for [com.primatics.analytics.auth.UserStatus#VALIDATION_PENDING]
DEBUG [org.hibernate.engine.TwoPhaseLoad] adding entity to second-level cache: [com.primatics.analytics.auth.UserStatus#VALIDATION_PENDING]
DEBUG [org.hibernate.engine.TwoPhaseLoad] done materializing entity [com.primatics.analytics.auth.UserStatus#VALIDATION_PENDING]
DEBUG [org.hibernate.engine.StatefulPersistenceContext] initializing non-lazy collections
DEBUG [org.hibernate.event.def.AbstractSaveEventListener] delaying identity-insert due to no transaction in progress
DEBUG [org.springframework.transaction.interceptor.TransactionInterceptor] Completing transaction for [com.primatics.analytics.service.admin.RegistrationService.createCustomer]
DEBUG [org.springframework.orm.jpa.JpaTransactionManager] Triggering beforeCommit synchronization
DEBUG [org.springframework.orm.jpa.JpaTransactionManager] Triggering beforeCompletion synchronization
DEBUG [org.springframework.orm.jpa.JpaTransactionManager] Initiating transaction commit
DEBUG [org.springframework.orm.jpa.JpaTransactionManager] Committing JPA transaction on EntityManager [org.hibernate.ejb.EntityManagerImpl@174689]
DEBUG [org.hibernate.transaction.JDBCTransaction] commit
DEBUG [org.hibernate.transaction.JDBCTransaction] re-enabling autocommit
DEBUG [org.hibernate.transaction.JDBCTransaction] committed JDBC Connection
DEBUG [org.hibernate.jdbc.ConnectionManager] aggressively releasing JDBC connection
DEBUG [org.hibernate.jdbc.ConnectionManager] releasing JDBC connection [ (open PreparedStatements: 0, globally: 0) (open ResultSets: 0, globally: 0)]
DEBUG [org.springframework.orm.jpa.JpaTransactionManager] Triggering afterCommit synchronization
DEBUG [org.springframework.orm.jpa.JpaTransactionManager] Triggering afterCompletion synchronization
DEBUG [org.springframework.transaction.support.TransactionSynchronizationManager] Clearing transaction synchronization

It seems for some reason hiberate does not like the setup. Please help me out here.