Taxation: Who will bell the cat?

Ramu Ramanathan tries to de-mystify the vexed issue of service tax on printing.

07 Jan 2013 | By Samir Lukka

In the past few days, PrintWeek India has been speaking to print firm CEOs about it. One view that resonates is: due to the ambiguity regarding printing – whether service tax is applicable or not – print firms are harassed by the authorities.

This is what we have understood from luminaries of the Indian print industry.

Most of the jobs come under Central Excise Tariff numbers which are listed below.

Products

Central ExciseTariff Number

Excise Duty
Labels 48211020                 12%+2%+1%
Diaries / registers/a/c books 48201090 12%+2%+1%
CD covers 48192010 12%+2%+1%
CD inlays 48211020 12%+2%+1%
Cartons 48192090 12%+2%+1%
Carry bags 48194000 12%+2%+1%
Letter pads 48201020 12%+2%+1%
Envelopes 48171000 2%+2%+1%
Letter cards
Plain post cards
Correspondence
Cards		 48172000 2%+2%+1%
2%+2%+1%
2%+2%+1%
2%+2%+1%
Paper tags 48211010 12%+2%+1%
Printed post cards 49090010 2%+2%+1%
Greeting cards
Wedding cards
With or without
Envelopes		 49090010 2%+2%+1%
2%+2%+1%
2%+2%+1%
2%+2%+1%
Calenders 49100010 2%+2%+1%
Printed posters 49111010 NIL
Printed books 49011010 NIL
Brochures, pamphlets, booklets, leaflets and similar printed matter 49011010 NIL
Lamas – trade advertising material 49011010 NIL


P Narendra of Pragati Offset spoke to us and he said, “If you look at the above table, it is clear most of the industry's activities are covered under excise and if a print firm is not paying excise on books etc, it is only because they are zero-rated.” 

Immediately two questions come to mind.

-  If a print firm is already registered under Central Excise and is subject to the tariff as mentioned above, is Service Tax applicable?

-  Also there is an exception here. If there is a packaging firm that sends paper boards to be printed by a third party. These sheets are printed by the third party and sent back to original party where they convert these printed sheets into boxes. This is supplied to customers with taxes and excise duties charged. We understand from Notification No. 25/2012 - Service Tax dated 20th June 2012 - Point no 30 that carrying out an intermediate production process as job work in relation to printing is exempt from Service Tax.

We spoke about the two questions and solicited views from the industry about how a print firm should proceed with Service tax. Especially if a print firm is registered as an excise dealer and is paying excise on products that are excisable.

PrintWeek India's view: Taxations is a vexed issue. We feel, the Indian print industry needs clarification and help on the service tax issue. There is no communication from any government official if printing is subject to service tax or not. If there's an official letter from a Government of India authority, every print firm in India could furnish that document when they are paid "a visit". Till such time, the harassment continues; and independent tax consultants will make hay. 

But who will bell the cat?