CA Anuj Mehta

CA Anuj MehtaWHETHER SERVICE TAX IS APPLICABLE ON PRINTED BOOKS BY PRINTING PRESS?

   First we need to understand what is service?

In the new regime, all services, other than services specified in the Negative List, provided or agreed to be provided in the ‘taxable territory’ by a person to another would be taxed. Service has been defined in clause (44) of the new section 65B and means –

  • any activity
  • for consideration
  • carried out by a person for another

           And includes a declared service

Further service does not include:

  • any activity that constitutes only a transfer in title of (i) goods or (ii) immovable property by way of sale, gift or in any other manner or transfer, delivery or supply of goods which is deemed sale under the constitution of India
  • a transaction only in (iii) money or (iv) actionable claim
  • any service provided by an employee to an employer in the course of the employment
  • fees payable to a court or a tribunal set up under a law for the time being in force

From the NEGATIVE LIST of Services under service tax act, Entire No. (e) and (f) are relevant for printing industry are reproduced below:

   (e) Trading of goods

    (f)  Any process amounting to manufacture or production of goods

So now one can say “If any process amounting to manufacture or production of goods then on the same service tax will not be applicable”.

The expression “process amounting to manufacture or production of goods” is defined in section 65B (40) as follow:

     “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 narcotic on which duties of excise are leviable under any State Act for time being in force.”

   Thus following activity on which service tax will not attracted are as under:

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(a)    Process on which duties of excise are leviable under section 3 of the Central Excise act 1944

(b)   Any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and narcotic on which duty is leviable.

            As per section 3 of Central Excise act 1944, duty shall be levied and collected on all excisable goods which are produced or manufactured in India at the rate forth in first schedule of Central Excise Tariff act, 1944.

 The term ‘excisable goods’ shall have a meaning assigned to it in section 2(d) of the central Excise Act namely,-

“Excisable goods” means goods specified in the First Schedule and the Second Schedule to the Central Excise Act, 1985 as being subject to duty of excise and includes salt”

     Now question arise what is manufacture?

Manufacture means: “some input material undergoing into a process and resulting into a different commercial commodity having different identity & utility from its input.

The expression “manufacture” has been defined in sec2 (f) of the act, according to which it includes any process –

(i)   Incidental or ancillary to the completion of a manufactured product;

(ii)      Which is specified in relation to any goods in, the section or chapter notes of the schedule to the Central Excise tariff act, 1985 as amounting to manufacture Or

(iii)    Which in relation to the goods specified in the Third Schedule[MRP goods etc], involves packing or repacking of such goods in unit container or labeling or re-labeling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer (Deemed Manufacture )

So if we look at printing work in reference of above definitions we can easily say that “printed books amounts to a manufacturing activity” As printed book having a different identity & utility from its input i.e. plain paper

 Further, If you look at the below table, it is clear most of the printing work are covered under chapter 48 & chapter 49 of the first schedule to the Central Excise tariff act, 1985 if a print firm is not paying excise on print books etc, it is only because they are zero-rated.”

Products Central Excise Tariff Number Excise Duty
Labels            48211020 12%+2%+1%
Diaries / registers/a/c books 48201090 12%+2%+1%
CD covers 48192010 12%+2%+1%
CD inlays 48211020 12%+2%+1%
Cartons 48192090 12%+2%+1%
Carry bags 48194000 12%+2%+1%
Letter pads 48201020 12%+2%+1%
Envelopes 48171000 2%+2%+1%
Letter cards
Plain post cards
Correspondence
Cards
48172000 2%+2%+1%
2%+2%+1%
2%+2%+1%
2%+2%+1%
Paper tags 48211010 12%+2%+1%
Printed post cards 49090010 2%+2%+1%
Greeting cards
Wedding cards
With or without
Envelopes
49090010 2%+2%+1%
2%+2%+1%
2%+2%+1%
2%+2%+1%
Calenders 49100010 2%+2%+1%
Printed posters 49111010 NIL
Printed books 49011010 NIL
Brochures, pamphlets, booklets, leaflets and similar printed matter 49011010 NIL
Lamas – trade advertising material 49011010 NIL

Further item No 30 of ‘MEGA EXEMPTION NOTIFICATION’ (No.25/2012-ST dated 20/06/2012 enforced w.e.f 01/07/2012) grant a exemption to some of the services of job work which does not amount to manufacture.

As per the entry No. 30 (a) —  “carrying out an intermediate production process as job work in relation to agriculture, printing or textile processing  is exempt from service tax

So now we can say that:

(i)                 “Any process amounting to manufacture or production of goods” is exempt from service tax as mention in the NEGATIVE LIST itself, in tune with section 2(f) of the Central Excise Act, 1944.

(ii)               Secondly carrying out an intermediate production process as job work in relation to printing is also exempt from service tax by way of item no 30 (a) of Mega Exemption Notification. (No.25/2012-ST dated 20/06/2012)

Conclusion: Thus, we can conclude that Printed books by Printing press does not attract Service Tax, as “SERVICE PROVIDERS”

———————————

Anuj Mehta, ACA, B.Com
Mobile: +91 9712286097
E-mail: amehtaca4u@gmail.com

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11 responses to “Implications of Service Tax on the Printing Industry”

  1. Ardent Prints says:

    Sir, Would like to understand, would VAT applicable on T-Shirt printing/lanyard. We procure readymade T-shirts and white satin tapes and print on them for events. Should we charge VAT to customers.

  2. ajay kumar says:

    Please tell whether service tax would be levied on printing of Pamphlets, Brouchers, T-shirts, bill book, voucher book.

  3. ajay kumar says:

    sir i have a printing press and i got job form ABC. I have tin no. from sale tax department.
    They give us paper. Now question is how much percentage I charged vat or service tax from ABC. They are telling there is no tax on printing job work.

  4. Astha says:

    Dear Sir

    My friend is in printing outsourcing services (he doesn’t own any machinery, he just work as order trader). He buy the material from market, gets the order from company/client and provide the material & designing to some printing press. After that deliver the final product to his clients. Now my question is whether any tax (either HVAT or Service tax) applicable on him ?
    Please suggest. It’s highly confusing.

  5. Murali Krishna says:

    Dear sir
    I have screen printing press.I Have one industrial screen printing works contract with ink and Related materials I register Service tax No.Newly
    plz give me suggestion How mach Percent (%) Vat & Service Tax Value of Toatl Invoice

    thanks

  6. VIJAY GOSAIN says:

    Dear Sir,

    One of my client (XYZ pvt ltd.) is into a publishing of magazine business, all the advertisement creatives and editorial were prepared in-house and then the final printable stuff/PDFs has been sent to one outsourced printing press.

    No service charge has been charged by XYZ pvt ltd from the advertisers in the magazine.. is it correct.?

    Printing Press raises a printing charges bill with WCT/Vat in XYZ pvt. Ltd. name
    Paper vendor is also raising a bill separately with vat in XYZ Pvt. Ltd name .

    Please advise….

    Best Regards

    CA Vijay Gosain
    98185 90250

  7. hari om says:

    Dear sir

    my firm having printing press. and it print publicity material like Leaflet, Posters, dangler, Magazine, Medicine Inserts, and my firm also work independently to print different advertising material. now my question is i am liable for excise number. plz give me suggestion We should apply for excise number.

    thanks

  8. sanjay says:

    Sir, the above view that carrying out an intermediate production process as job work in relation to printing of books is exempt from service tax by way of item no 30 (a) of Mega Exemption Notification. (No.25/2012-ST dated 20/06/2012) not appears to be correct.

    Because the mega notification exempts “process as job work in relation to agriculture, printing or textile processing” and the printing as mentioned in the notification relates to textile i.e. printing on cloth and not the printing of books.

  9. CA Jigar Parikh says:

    Dear Shivnandan Agrawal,

    Printing the register as per the specification customer does not make you job worker and you continue to be independent manufacturer. Kindly note that, in addition to tariff rate provided, one will also have to look in to the exemption notification(s), if any, issued by the Board which could relate to the printing of registers.

  10. Ashish gupta says:

    Sir

    Please tell whether service tax would be levied on printing of Pamphlets, Brouchers, T-shirts, bill book, voucher book.

    Thanks

  11. Shivnandan Agrawal says:

    Sir
    It means we are printing registers for customers as per there specifications, we are liable to excise duty?

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