View on filling and packing job

[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?

[Guest]

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

Dispute Over Service Tax on Warehouse Rental Charges: Is It Storage & Warehousing or Renting of Immovable Property? A client involved in a filling and packing job is paying excise duty based on the brand owner's selling price. The contract includes fixed monthly charges labeled as 'warehouse rental charges,' leading the department to demand service tax under Storage & Warehousing services. The client argues they are only manufacturing and paying the appropriate duty. One expert suggests the charges fall under 'Renting of Immovable Property,' necessitating service tax, while another advises examining whether the value is already included in excise duty to avoid service tax. A third expert recommends a detailed examination to determine the correct service tax category.