“Teena Labs Ltd” Manufacture Vs Renting

The Hyderabad Bench of the CESTAT decisively rejects an attempt to levy service tax on pharmaceutical job work arrangements by treating them as renting transactions. 

The Tribunal finds that the substance of the arrangement was contract manufacturing amounting to “manufacture” under Central Excise law, thereby falling outside the scope of taxable services.

It reiterates that classification must follow the real nature of the transaction and not the structure of payment or contractual controls imposed by the principal manufacturer. The ruling also reinforces that reimbursable expenses cannot be independently subjected to service tax.