Applicability of Service Tax on Article Processing Charges

[Rohit Kapoor]

We are the publishers of books and journals in the field of Science, Technology and Medicine. We published numerous journals both society owned and proprietary. In one of our journal, which is published online, we charge the author for publishing their article. Does it transaction involves service tax?

[Ganeshan Kalyani]

Yes , it is service and shall attract service tax.

[KASTURI SETHI]

In my view, it is covered under the category, "Other Than Negative list". Thus I concur with the views of Sh.Ganeshan Kalyani, Ji, an expert

[Rupesh Gupta]

Dear Mr. Rohit just like you I am also in the same trade and situation. We are publishing since 15 years now and only recently I came to know that some fellow STM publishers are charging service tax on Article Processing Charges which was shocking for me so I searched extensively on the net and found following articles:

1. http://taxguru.in/service-tax/implications-service-tax-printing-industry.html

2. https://www.taxtmi.com/forum/issue?id=472

3. http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=16003

which support the view that publication/printing of Books/Journals/Newspapers is totally exempt from Excise/VAT/Service tax as it is a manufacturing process and as per clause (f) of section 66D of the Service Tax Act ‘processes amounting to manufacture or production of goods’ is a service covered under ‘Negative list’. We supply certain copies of the Journal and/or the article (Repritns) in hard/soft format to author which is a product manufactured/produced by the publisher and the charges we receive are for that only hence it is a manufacturing activity exempt from Service Tax. Excise and VAT is applicable on manufacturing activities but in case of publication of Books/Journals the rate is ZERO hence no need to worry about that also. The only tax we need to pay is Income Tax.

In view of above I would like to know the views of Sh.Ganeshan Kalyaniji and other experts to get some clarity.

Scenario 2: In case we assume that somehow these charges can be defined as service and service tax is applicable the situation become a bit trickier. We charge these to authors who can be within India or outside India. In case of foreign authors will it not fall under "Service Export" which again is exempt from service tax and for Indian authors, if the amount in a FY is less than 10 Lakhs, I understand it is also exempt. Please clarify Sir.

AI Summary

Service tax applicability on article processing charges debated as taxable service versus manufacturing exemption; export and small-value exemptions may apply. The central dispute is whether Article Processing Charges are a taxable service or an exempt manufacturing activity: one view treats the publisher's editing and publication facilitation as a taxable service, while the opposing view treats publication and supply of copies/reprints as a process amounting to manufacture or production of goods falling within the negative list; respondents also identify possible service-export and small-turnover exemptions if the charges are treated as services.