2012 (12) TMI 401 - AT - Service Tax

Waiver of pre-deposit Service Tax, interest & penalty Business Auxiliary Service - Assessee has undertaken the activity of harvesting sugarcane and its transportation to sugar factory from the fields of farmers - This activity is in relation to sale of sugarcane by farmers and purchase of sugarcane by the sugar factory and service provided of a commission agent - Held that - As the applicant is entitled for the benefit of Notification no. 13/2003-ST which provides exemption from payment of service tax in respect of service provided under Business Auxiliary Service in relation to the sale of agricultural products. Hence, pre-deposit of duty, interest and penalty is waived and recovery of the same is stayed during the pendency of the appeal. Stay Granted.

Summary

Issues:
- Waiver of pre-deposit of duty, interest, and penalties regarding the provision of 'Business Auxiliary Service' by the applicant to sugar manufacturers.
- Interpretation of Notification 13/2003-ST dated 20.06.2003 exempting 'Business Auxiliary Service' provided by commission agents in relation to agricultural products from service tax.

Analysis:
The appellant sought a waiver of pre-deposit of duty amounting to Rs. 1,43,60,622, along with interest and penalties, contending that the demand was confirmed due to alleged non-payment of appropriate service tax on amounts received from sugar manufacturers for providing 'Business Auxiliary Service.' The applicant claimed to be engaged in harvesting and transporting sugarcane, paying service tax for these activities, and receiving amounts reflected as commission for harvesting and transportation. The adjudicating authority deemed the applicant a commission agent covered under 'Business Auxiliary Service,' leading to the demand. However, the appellant argued for exemption under Notification 13/2003-ST, citing dealings with agricultural products like sugarcane.

The learned A.R countered, stating that the applicant's services included providing manpower, transport of goods for sugarcane activities, and procurement of inputs for sugar manufacturers, thus falling under 'Business Auxiliary Service' and not qualifying for exemption. The Tribunal, upon review, found that the applicant's activities of harvesting and transporting sugarcane were related to the sale and purchase of sugarcane, akin to a commission agent's role. Consequently, the Tribunal held that the appellant was entitled to the benefit of Notification no. 13/2003-ST, exempting service tax on 'Business Auxiliary Service' concerning the sale of agricultural products. Thus, the pre-deposit of duty, interest, and penalty was waived, and recovery stayed pending appeal.

Given the significant amount of service tax involved, the matter was scheduled for regular hearing on 03.10.2012 to further address any remaining issues or developments in the case.