2026-VIL-22-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Job work, Manufacturing - The appellant manufactures products on its own account and also undertakes job work for its principal manufacturer, wherein the principal supplies raw materials and packaging materials, and the appellant undertakes processing and manufacturing strictly in accordance with the specifications. The finished goods are cleared from the appellant's factory on payment of applicable Central Excise duty - Whether the income reflected as "service income" in the appellant's audited financials, but not disclosed in its ST-3 returns, is liable to service tax – HELD - The activity undertaken by the appellant, i.e., manufacturing medicaments on behalf of principal manufacturer under a contractual agreement, where raw materials are supplied by principal and the finished goods are cleared on payment of excise duty, squarely falls within the ambit of "process amounting to manufacture" as defined in Section 2(f) of the Central Excise Act, 1944. This activity is expressly excluded from the levy of service tax by virtue of Section 66D(f) of the Finance Act, 1994, which provides that "any process amounting to manufacture or production of goods" is covered in the Negative List and thus not liable to service tax - The activity of manufacturing goods on behalf of a client is an excisable activity under the Central Excise Act, 1944 and cannot be classified as a taxable service under the "Business Auxiliary Service" category – The demand is set aside and the appeal is allowed
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