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Trading activity is an exempted activity as such included in the negative list. Is it a benefit to the business fraternity or additional liability?

Service Tax - By: - SAKTHIVEL PONNUSWAMY - Dated:- 4-6-2015 - In today s business scenario sale as such is very common by the manufacturing organizations. Meaning of sale as such:- in ordinary course of manufacturing activities purchase of various inputs and raw material are happening for manufacturing purpose. In the course of doing so it may happen that those inputs and raw material are not used in the manufacture either because of the quality issue or change of demand of final product in the .....

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n, the manufacturer or provider of output service shall maintain separate accounts for- (a) the receipt, consumption and inventory of inputs used- (i) in or in relation to the manufacture of exempted goods; (ii) in or in relation to the manufacture of dutiable final products excluding exempted goods; (iii) for the provision of exempted services; (iv) for the provision of output services excluding exempted services; and (b) the receipt and use of input services- (i) in or in relation to the manuf .....

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ithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow any one of the following options, as applicable to him, namely:- (i) pay an amount equal to six per cent of value of the exempted goods and seven per cent of value of the exempted services; or (ii) pay an amount as determined under sub-rule (3A); or (iii) maintain separate accounts for the receipt, consumption and inventory o .....

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he act of buying and selling. It involves the selling of goods in the same form as it was purchased. Thus, no further processing is done thereupon. Is trading activity is a service? This question first arose in the case of Orion Appliances Limited Vs. CCE, Ahmedabad - 2010 (5) TMI 85 - CESTAT, AHMEDABAD wherein it was held that trading activity is not at all a service. Further the rule 6(2) of cenvat credit rules requires maintaining separate account only in respect of exempted service and dutia .....

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ee is providing a taxable service and is undertaking another activity which is neither a service nor manufacture. In such a situation the only correct legal position appears to be that it is for the appellant to choose and segregate the quantum of input service attributable to trading activity and exclude the same from the records maintained for availment of credit. Hence the tribunal has held that the since trading activity is not a service, credit cannot be taken on the same. Thus, the assesse .....

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s . Also the definition of service under Sec 65B (44) excludes transfer of title in goods or immovable property, by way of sale, gift or any other manner. Trading activity is a service In order to remove the ambiguities arising out of such decisions, budget 2011 has included the trading activity in the definition of exempted services. Further trading activities has been included in the negative list in the chapter 5 of negative list which means it is exempted service. Plain reading of this appea .....

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