2011 (3) TMI 199 - AT - Service Tax

Demand - Exemption - Notification No.33.04 dated 3.12.04 was not applicable to the appellant - GTA transporting canned vegetable - The plea of the appellant before the ld. Adjudicating Authority was that Chapter Note 1 of Chapter 4 brings edible mushroom to the category of vegetables and the canned mushrooms are vegetables for the purpose of enjoying exemption from payment of service tax by GTA in respect of transportation of the such vegetables - Intention of the Notification to exempt GTA service from net of service tax seems to be to save fruits, vegetable, milk or eggs from decay or perishability, in transit by quick and accessible transportation on road so to make such commodities reachable to consumers before being spoiled and exemption to such transport service is granted The processing done by the appellant having converted the fresh vegetable into processed vegetable, that brought the former into a different state other than that originally existed and the thing produced is by itself a commercially different commodity - The commercially processed canned mushrooms do not enjoy the benefit scheme of exemption envisaged by the aforesaid Notification - Appeal is dismissed

Summary

Issues:
1. Challenge to the adjudication order denying exemption of Goods Transport Agency Service (GTA) for transporting canned vegetables from service tax levy.
2. Interpretation of Notification No.33/04 dated 3.12.2004 regarding service tax exemption for transport of fruits, vegetables, eggs, or milk by road.
3. Classification of canned mushrooms as vegetables for service tax exemption eligibility.
4. Application of common parlance understanding of vegetables for tax exemption purposes.
5. Differentiation between fresh and processed vegetables for tax exemption eligibility.

Analysis:
1. The appellant contested the first appellate order upholding the denial of service tax exemption for transporting canned vegetables by GTA. The issue revolved around the applicability of Notification No.33/04 dated 3.12.2004 to the appellant's case.

2. The appellant argued that canned mushrooms should be considered vegetables under the notification to claim service tax exemption. The appellant relied on Chapter Note 1 of Chapter 4, asserting that edible mushrooms fall under the vegetable category for exemption purposes.

3. The authorities rejected the appellant's claim, emphasizing the processing involved in producing canned mushrooms. The processing steps, including boiling, adding preservatives, and canning, transformed the mushrooms into a different product, distinct from fresh vegetables.

4. The Tribunal analyzed the common parlance understanding of vegetables for tax exemption, highlighting that processed vegetables, like canned mushrooms, deviate from the typical perception of fresh, green vegetables. The intention behind the notification was to exempt perishable goods like fruits and vegetables from service tax during transportation.

5. Ultimately, the Tribunal concluded that the processing of mushrooms into canned form altered their nature, making them commercially distinct from fresh vegetables. As a result, the appellant was deemed ineligible for the service tax exemption under Notification No.33/04. The decision was based on the understanding that processed vegetables do not align with the common perception of vegetables in the trade and market.

This comprehensive analysis of the judgment delves into the core issues surrounding the interpretation of the notification, the classification of canned mushrooms, and the application of common parlance principles in determining tax exemption eligibility for processed vegetables.