2013 (12) TMI 850 - AT - Service Tax

Demand of service tax - Commission received by them on the activities of harvesting and transportation of sugar cane upto the sugar cane factory - Busines Auxiliary Services - Notification No. 14/2004-S.T., dated 10-9-2004 - Held that - demand has been confirmed on the basis of the commission received for the services of harvesting and transportation of sugar cane to the sugar cane factory for the manufacture of sugar which is a manufacturing activity. Therefore, the applicants are not entitled for the benefit of exemption under Notification No. 14/2004-S.T. Further, from the facts of the case we find that the extended period has been rightly invoked - Stay granted.

Summary

Issues:
Demand confirmation on commission received for harvesting and transportation of sugar cane under Business Auxiliary Services category; Applicability of exemption under Notification No. 14/2004-S.T.; Invocation of extended period for demand confirmation.

Analysis:

1. Demand Confirmation on Commission Received:
The judgment addresses the demand confirmation of Rs. 34,61,930 against the applicants for the commission received on activities related to harvesting and transportation of sugar cane to the sugar cane factory under the Business Auxiliary Services category for the period 2005-06 to 2008-09. The applicants argued that the demand was not sustainable as they had already paid a significant amount of the service tax. They contended that since they were working on behalf of a specific entity for executing a contract related to sugar cane harvesting and transportation, and considering that sugar cane harvesting is not a service, the commission received should not be classified under Business Auxiliary Services. However, the tribunal found that the commission received for services related to manufacturing activities, such as sugar cane transportation for sugar production, did not qualify for exemption under Notification No. 14/2004-S.T.

2. Applicability of Exemption under Notification No. 14/2004-S.T.:
The applicants sought exemption from service tax payment under Notification No. 14/2004-S.T., dated 10-9-2004. They argued that since the activity of sugar cane harvesting should not be considered a service, the commission received should not fall under the Business Auxiliary Services category. However, the tribunal ruled that the commission received for services related to harvesting and transportation of sugar cane for manufacturing sugar did not meet the criteria for exemption under the said notification. The tribunal emphasized that the nature of the services provided by the applicants, which directly contributed to the manufacturing process, did not qualify for the exemption.

3. Invocation of Extended Period for Demand Confirmation:
Regarding the invocation of the extended period for confirming the demand, the tribunal found that the extended period was rightly invoked based on the facts of the case. The tribunal concluded that the commission received by the applicants for the services of harvesting and transporting sugar cane for sugar production constituted a manufacturing activity, which justified the confirmation of the demand within the extended period. Consequently, the tribunal directed the applicants to make a pre-deposit of the balance amount of service tax within a specified timeframe, with the provision for waiver of the pre-deposit upon compliance and stay of recovery during the appeal's pendency.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the tribunal's findings on each aspect, including the demand confirmation, exemption applicability, and the invocation of the extended period for demand confirmation.