Implications of Service Tax on the Printing Industry

CA Anuj Mehta

WHETHER 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:

(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”

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