2014 (8) TMI 509 - AT - Service Tax

Waiver of pre deposit - benefit of exemption Notification No. 13/2003-S.T., dated 20-6-2003 - Denial of refund claim - exemption of Business Auxiliary Services provided by a commission agent in relation to sale or purchase of agriculture produces from the service tax leviable thereon under Section 66 - Whether the appellants fall within the scope of Notification No. 13/2003-S.T., dated 20-6-2003 - Held that - Explanation attached to the scope of Notification No. 13/2003-S.T. clarifies the scope of agricultural produce. For availing the benefit of the notification, the various processes on the agriculture produce are required to be done by the cultivators himself. Admittedly, the appellants are not the cultivators of the agricultural produce, but were only rice producers/exporters. As such, at this prima facie stage, we are of the view that the benefit of the notification is not available to the appellant - Conditional stay granted.

Summary

Issues:
Interpretation of Notification No. 13/2003-S.T. for exemption from service tax on Business Auxiliary Services related to agriculture produce.

Analysis:
The appellant sought to dispense with the pre-deposit of service tax confirmed against them by the impugned order-in-revision. The appellants had filed a refund claim based on the exemption provided by Notification No. 13/2003-S.T., which exempts Business Auxiliary Services by a commission agent in the sale or purchase of agriculture produce from service tax. The appellants, engaged in rice export, had utilized overseas commission agents for order procurement. The liability to pay service tax, as per Section 66A(1) of the Act, rested on the recipient of the service, leading the appellant to pay the tax.

The original Adjudicating Authority had granted the refund claim by applying the benefit of the said notification. However, the Commissioner, in the impugned order, reversed this decision, prompting the present appeal. The central issue revolved around whether the appellants qualified for the scope of the notification. The notification's explanation clarified that the agricultural produce's processing must be done by the cultivator to avail the exemption. As the appellants were not cultivators but rice producers/exporters, it was prima facie determined that they did not qualify for the notification's benefit.

Consequently, the Tribunal directed the appellant to deposit 50% of the demanded duty within eight weeks, with compliance due by a specified date. Upon this deposit, the pre-deposit of the remaining duty amount would be waived, and recovery stayed during the appeal's pendency. The decision was dictated and pronounced in open court by the Tribunal members.