View on filling and packing job

[Asked by Guest]

My client is a job worker doing filling and packing job and paying excise duty on selling price of the brand owner, from the beginning. Job work contract comprises of charges schedule which amongst other, mentions of fixed monthly charges termed as “warehouse rental charges.” Because of this term, the dept. is asking to pay service tax under Storage & Warehousing services on that rental amount. This is the part of the total payment schedule and we are not providing any services to the brand owner. What we are doing is the manufacturing and paying appropriate duty. Is the department’s stand correct?

As you mentioned in your query that your contract comprises warehouse rental charges, it is covered under proposed service "Renting of Immovable Property". So Service Tax shall be levied. So You may change the conditioned of contract.

[Madhukar N Hiregange]

whwere the value is included in the value of goods on whcih ED is paid then there cannot be servcie tax. You may also examine the billing to make it compatable to the actual transaction to avoid disputes.

[Surender Gupta]

On the basis of detailed examination only it can be revealed that the rental charges for warehousing is falling under the old category of "Storage & Warehousing Services" or under the new category of "renting of immovable property".

AI Summary

Renting of immovable property can trigger service tax for contractual warehouse rental charges unless covered under excise valuation.
A job worker's contract includes "warehouse rental charges" and the department seeks service tax; classification may be as Storage & Warehousing Services or Renting of Immovable Property. If the rental amount is included in the value of goods on which excise duty is paid, service tax may not apply. Determination requires detailed examination of contract terms and billing to decide whether the charge is a separate taxable service or part of excise valuation.