2015 (12) TMI 325 - AT - Service Tax

Benefit of Notification No. 14/2004-S.T., dated 10-9-2004 - whether the service rendered in relation to supervision of making of tents, mosquito net, trousers and shorts can be covered in the scope of service provided in relation to textile processing - Held that - The textile processing as commonly understood is to cover processes like singeing, bleaching, dyeing etc. of textiles. That apart, at a more fundamental level, if textiles and textile articles are to be treated as synonymous, then there was no need to mention them separately. Further garments, mosquito nets and tents etc. by no stretch of imagination can be called textiles. Indeed they are clearly articles of textiles and apparels. They have separate classification under the Central Excise Tariff. The observation of the Commissioner (Appeals) that textile and textile articles cannot be segregated in the context of providing service relating to textile is devoid of any basis whatsoever. - Decided in favour of Revenue.

Summary

Issues:
Service Tax demand on supervision charges for mosquito net, tents, trousers, and shorts under business auxiliary service; Eligibility for benefit of Notification No. 14/2004-S.T. on service provided in relation to textile processing.

Analysis:
The appeal was filed against the Order-in-Appeal setting aside the Order-in-Original confirming Service Tax demand of Rs. 6,39,883 along with penalties. The original adjudicating authority found the respondents liable for not paying Service Tax on supervision charges for mosquito net, tents, trousers, and shorts under business auxiliary service. The authority imposed penalties for deliberate suppression of details to evade tax. The respondents claimed eligibility for the benefit of Notification No. 14/2004-S.T., which exempts certain taxable services related to business auxiliary service. The contention was that the service provided was in relation to textile processing. However, the original authority did not accept this claim, stating the service was not related to agriculture, printing, textile processing, or education.

The Commissioner (Appeals) set aside the original order, arguing that segregating "textile" and "textile articles" in the context of providing services related to textiles would defeat the purpose of the exemption notification. The Revenue contended that mosquito nets, trousers, and shorts cannot be considered textiles but are articles of textiles/apparels. The core issue revolved around whether the service provided for the supervision of making tents, mosquito nets, trousers, and shorts could be categorized under services related to textile processing. Textile processing typically involves processes like singeing, bleaching, and dyeing of textiles. Additionally, garments, mosquito nets, and tents are distinct articles of textiles and apparels, not textiles themselves. The Commissioner's view that textile and textile articles cannot be separated in the context of providing textile-related services was deemed unfounded.

In conclusion, the Tribunal allowed the Revenue's appeal, emphasizing that the services provided for the supervision of making tents, mosquito nets, trousers, and shorts did not fall within the scope of services related to textile processing. The distinction between textiles and textile articles was crucial, and the items in question were considered articles of textiles and apparels, not textiles themselves.