2016 (11) TMI 584 - AT - Service Tax

Demand - business auxiliary services - processing disposable waste water and releasing the same through common drainage into common effluent treatment plant will amount to services rendered to a client for processing of goods? - Held that - It is also to be noted and is a common knowledge that disposal of waste water in the common effluent treatment plant of Maharashtra pollution control board, needs to adhere specifications acceptable for such disposal, which are achieved by the treatment undertaken by the appellant. We notice that treatment of effluent waste cannot be considered as processing of the goods by any stretch of imagination, and we also note that the show cause notice does not invoke specific clause of the definition of Business Auxiliary Services for levy of tax - Impugned order is set aside and appeal is allowed.

Summary

Issues:
Demand of service tax under business auxiliary services for processing waste water received from a client.

Analysis:
The appeal was against an Order-in-Original dated 27.04.2012 regarding the demand of service tax from the appellant for processing waste water. Both lower authorities held that the appellant's activity of processing waste water from a client and releasing it into a common effluent treatment plant qualifies as services rendered to a client for processing of goods. However, the appellant argued that the activity of treating waste water does not fall under processing of goods based on a CBEC circular. The Tribunal agreed with the appellant, citing previous decisions like Bharuch Enviro Infrastructure Ltd., Globe Enviro Care Ltd., and Ferro Scrap Nigam Ltd. The Tribunal noted that the treatment of waste water to meet specifications for disposal does not constitute processing of goods and that the show cause notice did not invoke a specific clause of the definition of Business Auxiliary Services for tax levy.

The Tribunal found that the treatment of waste water received from the client does not amount to processing of goods under the definition of Business Auxiliary Services. The appellant's activity of treating industrial waste before releasing it into the effluent treatment plant was deemed necessary to meet disposal specifications set by the pollution control board. The Tribunal emphasized that the treatment of waste water cannot be considered as processing of goods and that the show cause notice lacked specificity in invoking the relevant clause for tax imposition. Therefore, the impugned order was deemed unsustainable and set aside, allowing the appeal in favor of the appellant.