service tax on job work

[VIKAS PARKHE]

JOB WORK OF CONVERSION OF MILK INTO SKIMMED MILK POWDER

[YAGAY and SUN]

GST 12% in our view. Please refer Circular No. 126/45/2019-GST dtd. 22nd November, 2019.

[KASTURI SETHI]

Dear Querist,

The title indicates that the query is about Service Tax. Pl. confirm.

[VIKAS PARKHE]

Yes IT IS MY SERVICE TAX QUERY. THAT IS IN F.Y. 2014-15 THE SERVICE TAX IS APPLICABLE ON JOB WORK OR NOT ON CONVERSION OF MILK TO SKIMMED MILK POWDER. PL. ANY HIGH COURT/CEGAT DECESION KINDLY PROVIDE.

[Anish Goyal]

Pl confirm in what stage the issue is. As F.Y 2014-15 for issuance of show cause notice is now time barred.

[KASTURI SETHI]

During the period from 1.7.12 to 31.5.15, "any process amounting to manufacture or production of goods" remained in the Negative List. See Section 66 D(f) of the Finance Act, 1994.(it was further amended w.e.f. 1.6.15 which is not relevant for you. Conversion of milk into skimmed milk powder amounts to manufacture and is classified under Chapter/Heading no. 0401. Hence Service Tax is not leviable. It is out of scope of Service Tax law. Study thoroughly the following case laws along with relied up on case laws:-

2008 (231) E.L.T. 162 (Tri. - Ahmd.) = 2007 (3) TMI 637 - CESTAT, AHMEDABAD PANCHMAHAL DISTT. CO-OP. MILK PRODUCERS UNION LTD. Versus COMMISSIONER OF C. EX., VADODARA

2004 (167) E.L.T. 456 (Tri. - Del.) = 2004 (2) TMI 132 - CESTAT, NEW DELHI MEHSANA DIST. CO-OP. MILK PRODUCERS’ UNION LTD. Versus C.C.E., AHMEDABAD

[Amit Agrawal]

I agree with Shri Kasturi Ji about the non-taxability of said activity under service tax!

W.r.t. five year time limit to issue SCN in this regard for H2 of FY 14 - 15, it is extended to 30.09.2020 in view of Section 6 of THE TAXATION AND OTHER LAWS (RELAXATION OF CERTAIN PROVISIONS) ORDINANCE, 2020 read with notification dated 27.06.2020 (bearing F. No. F. No. CBEC-20/06/08/2020-GST).

AI Summary

Process amounting to manufacture excludes service tax on job work converting milk to skimmed milk powder, affirming non taxability.
The conversion of milk into skimmed milk powder constitutes a process amounting to manufacture and, being classified under Chapter/Heading 0401, was excluded from service tax under the negative list for the relevant period, rendering the activity out of service tax scope; tribunal authorities are cited in support, while later GST guidance treats the activity under GST rates and administrative relief extended the time limit for issuing show cause notices.