Service tax applicability

Indeed printing (both on textile and paper) has been held as ‘works contract’ for the purpose of sales tax. However, in my view, service tax will not apply for the following reasons.

Carrying out an intermediate production process as job work in relation to agriculture, printing or textile processing is exempt – Sr No.  30(a) of Notification No. 25/2012-ST dated 20-6-2012 effective from 1-7-2012.

Thus, if printing is done on job work basis, it is out of purview of service tax.

If entire printing work is done with material (e.g. letterheads, Invoice books, balance sheet etc.), the activity is ‘manufacture’.

Any process amounting to manufacture or production of goods is not taxable service – Clause (f) of Negative List of services as per section 66D of Finance Act, 1994 introduced w.e.f. 1-7-2012.

“Process amounting to manufacture or production of goods” means a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 (1 of 1944) or any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act for the time being in force – section 65B(40) of Finance Act, 1994 effective from 1-7-2012.

The reason is that excise duty is payable if activity is ‘manufacture’.

But is there any exemption limit on turnover/sales of printing press, after exceeding which, service tax is applicable?

Yes, there is a threshold limit of Rs. 10 Lakhs.

Meaning thereby, if your taxable services for the preceding year doesnt exceed Rs. 10 Lakhs, then you shall be entitled for exemption upto turnover of Rs. 10 Lakhs for the current Financial Year.