SERVICE TAX

[pankaj jain]

D.O.F. No. 334/03 /2014-TRU dt 17/2/2014 for applicability of Service Tax on milling and storage of rice. In view of the said notification please advise whether service tax will be applicable on milling of rice which will be used in manufacture of alcohol for human consumption on which service tax is already applicable as per finance bill 2015.

[Ganeshan Kalyani]

Serial no.30 of Notification 25/2012 states that ''Carrying out an intermediate production process as job work in relation to - (a) agriculture, printing or textile printing...'' .Secondly in the Trade circular point no.1.3 Milling of rice, it is clarified that milling of paddy into rice carried out as job work is covered by the exemption at Sr. no.30 of Notification 30/2012, since such milling of paddy into rice is an intermediate production process.

In view of above provision, i understand that service tax will not be levied on milling of paddy into rice.

[DR.MARIAPPAN GOVINDARAJAN]

Yes, the views of Ganeshan are seem to be correct.

[pankaj jain]

Respected Ganeshan Kalyani ji,

milling of rice is an intermediate production process as job work for manufacture of alcohol. . As per finance act 2015 ,new changes in notification no. 25/2012-ST shall be effective from notified date.(expected to be notified soon). In entry 30, in item (c), for the words “any goods”, the words “any goods excluding alcoholic liquors for human consumption,” shall be substituted vide notification no. 06/2015 . Intermediate production process as job work in relation to manufacture of alcohol has omitted from the negative list (as per above said changes) . Please clear that the service tax on milling of rice will be applicable or not in the light of the above changes.

 

AI Summary

Service tax exemption for intermediate production processes questioned after exclusion for goods used in alcohol manufacture. Previously, Serial No. 30 of Notification 25/2012 exempted intermediate production processes as job work, including milling of paddy into rice, and trade guidance treated such milling as covered by the exemption. Amendments introduced by the Finance Act 2015 substitute 'any goods' with 'any goods excluding alcoholic liquors for human consumption' and remove intermediate production process as job work in relation to manufacture of alcohol from the negative list, thereby calling into question the tax treatment of milling of rice for alcohol manufacture.