AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 13
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....payment, APL was liable to pay the balance amount. Further, the appellants were also getting reimbursed certain expenses incurred by them by APL towards power, fuel, water, filter pads, maintenance of machinery in connection with job work services provided to APL. The department felt that the activity would be covered under 'Renting of Immovable Property Services' (RIPS) under section 65(105)(zzzz) of the Finance Act, 1994. The department, after going through the agreement, inter alia, felt that APL had approached the appellant for utilizing part of its facilities for a contract period for the manufacture of some of their products through conversion work basis. It was also noticed that certain clauses indicated that the agreement was for exclusive use of the said premises of the appellant by APL for carrying out the said operations. In other words, the department felt that the entire premises, plant, land and building facilities of the appellant were exclusively allocated on monthly lump sum payment to APL. 3. The appellants, essentially, made various submissions including that they were engaged in the conversion work for manufacturing specified goods on job work basis in accord....
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....gment of Hon'ble Supreme Court in the case of UOI & Anr. Vs M/s Intercontinental Consultants & Technocrats Pvt Ltd [2018 (3) TMI 357 (SC)]. He has also submitted that in the facts of the case, extended period of limitation is not sustainable and penalties under both section 76 & 78 of the Act cannot be imposed simultaneously. 6. On the other hand, learned AR has mainly contested that the scope of entry clearly shows that this was a factory, which has been rented out by the appellants to APL and the nature of so called 'job work charges' is also not what normally is taken by a job worker as it is split into both fixed as well as reimbursable expenses and that it is not a pure job work and it is more akin to renting out of factory premises to APL. He has also submitted that the case laws cited by the appellants are distinguished in the facts of the case. 7. Heard both sides and perused the records. 8. The core issues to be decided in this case are, as under. a) Whether it is a case of manufacturing activity and therefore, not leviable to service tax or otherwise. b) Whether reimbursable expenses are to be included in the gross value leviable to service tax ....
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.... worker for conversion. In this model, it is improper to allege that the entire factory has been taken on rent by the principal manufacturer, who is manufacturing the goods and the owner of the factory i.e., job worker has no role, whatsoever, in the conversion of said goods. 10. We find that reliance placed by the appellant on the case of JB Mangharam Foods Pvt Ltd (supra) is relevant, where the Tribunal, inter alia, held that when the contract itself recognizes the arrangement between the parties as job work agreement, such activity has to be considered as an activity of manufacture and production of goods on job work basis and it was not a case of renting of factory premises. We also note that in this case, there is no agreement between the appellant or APL in relation to renting of immovable property. We also find that job work charges, per se, are exempt from the service tax under BAS as defined under section 65(1)(v) and therefore, such job work, which is otherwise covered under the category of BAS would still exclude any such activity if that amounts to manufacture of excisable goods. In other words, production or processing of goods for, or on behalf of, another is a tax....
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....m Doongarmall Vs CIT [1961 (42) ITR 392], wherein, inter alia, it was held that it is the quality of the payment that is decisive of the character of the payment and not the method of payment or its measure. 12. We have also perused the judgment of the Coordinate Bench in the case of Jubilant Industries Ltd (supra), wherein, it was held that processes amounting to manufacture cannot be considered as manufacturing and subjected to Excise duty and also be considered as service and subjected to service tax and it is because of this, the process of manufacture has been specifically kept outside the purview of Business Support Services. The relevant para is cited below. "13. We are in agreement with the contention that the same activity cannot be considered as manufacturing and subjected to excise levy and at the same time considered to be a service and subjected to service tax. This principle does not need much discussion and is also recognized under Section 65(19) of Finance Act, 1994 levying service tax on processing of goods not amounting to manufacture. Process amounting to manufacture is kept specifically out of the scope of the entry. That being the case such an activ....