Processes amounting to manufacture or production of goods are covered in Negative List
(except alcoholic liquor for human consumption)
On manufacture or deemed manufacture, Excise duty is charged .
Hence, no service tax levied on these as this will amount to double taxation
If as per Central Excise certain process amount to manufacture, Excise will be applicable on it
However if central excise duty is wrongly paid on a certain process which does not amount to manufacture then Service tax will be applicable on it
However, Alcoholic liquor for human consumption has been removed from Negative list ,hence service tax can be charged on it
Question 2
State whether following activities undertaken by M & M Manufacturers of Chandigarh would be
liable to service tax:
(i) Manufacture of herbal cosmetics liable to excise duty under the Central Excise Act, 1944.
View answer
These are included in Negative List as it is a process amounting to manufacture and hence not taxable
(ii) Manufacture of alcoholic drinks liable to excise duty under the Punjab Excise Act, 1914.
View answer
Now,it has been removed from Negative List,hence Service tax can be levied on it
(iii) Processing of raw materials. The process is not leviable to excise duty under any Central or State Acts.
View answer
It is not a process amounting to manufacture as no excise duty charged on it
Hence, it not covered in Negative list and hence taxable
(iv) Manufacture of medicines liable to excise duty under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955.
View answer
These are included in Negative List as it is a process amounting to manufacture and hence not taxable