2011 (2) TMI 473 - AT - Service Tax

Demand - storage & warehousing services - exemption under order No. 1/2002-S.T., dated 1-8-2002 - In the absence of any challenge to the setting aside of the service tax liability on the storage & warehousing services, we uphold that portion of the impugned order which is in favour of the respondent/assessee as regards the storage & warehousing services and it is held that the respondent/assessee is not liable for service tax under the category of storage & warehousing of tea Regarding packaging services - Held that assessee is not liable to pay the service tax liability on the packaging services and remand the matter back to the adjudicating authority to re-consider the issue afresh after following the principles of natural justice - Appeal is allowed by way of remand

Summary

Issues:
1. Service tax liability on storage & warehousing of tea
2. Service tax liability on packaging services

Analysis:
1. Service tax liability on storage & warehousing of tea:
The respondent, engaged in providing bulk storage facility and blending/packing of tea, contended that being an agricultural product, tea was exempt from service tax. The Assistant Commissioner, however, directed them to pay service tax under storage & warehousing and packing services. Show-cause notices were contested, but the adjudicating authority upheld the demands. The Commissioner (Appeals) set aside the Orders-in-original, stating that the exemption under Order No. 1/2002-S.T. was applicable to tea as an agricultural produce. The Revenue did not challenge this finding. Consequently, the Tribunal upheld the decision in favor of the respondent, stating they were not liable for service tax on storage & warehousing of tea.

2. Service tax liability on packaging services:
The Revenue contested the service tax liability only on packaging services. The Commissioner (Appeals) did not provide detailed findings on this issue. The Tribunal observed that the Commissioner had not clearly separated the value and taxability aspects in the decision. As a result, the Tribunal set aside the order regarding the service tax liability on packaging services and remanded the matter to the adjudicating authority for a fresh consideration following the principles of natural justice. The Tribunal did not uphold the decision in favor of the respondent on the packaging services due to the lack of detailed findings by the Commissioner.

In conclusion, the Tribunal ruled in favor of the respondent, holding them not liable for service tax on the storage & warehousing of tea. However, the decision on the service tax liability regarding packaging services was set aside for a fresh consideration. The appeals were disposed of accordingly.