Levy of service tax on production of alcoholic beverages on job work basis -reg

Guidance on Service Tax for Alcohol Production: Brand Licensing, Contract Manufacturing, and Lease Agreements Explained.

The circular addresses the levy of service tax on the production of alcoholic beverages on a job work basis. It distinguishes between various arrangements, such as brand licensing, contract manufacturing, and lease agreements. In brand licensing, the brand owner provides intellectual property services, subject to service tax. In contract manufacturing, if the process qualifies as 'manufacture' under the Central Excise Act, it is excluded from Business Auxiliary Service tax. However, activities like packing or labeling alone are taxable. Lease arrangements involve service tax on rent collected. The circular modifies previous guidance and advises careful examination of contractual arrangements to determine tax liability.