2017 (1) TMI 170 - AT - Service Tax

Business auxiliary service - providing chilling facilities - whether the service comes under the head BAS and is taxable? - Held that - the issue has come up before the Tribunal in appellant s own case M/s Vinayak Industries Versus CCE & ST, Jaipur-I 2016 (6) TMI 1072 - CESTAT NEW DELHI , where it was held that There is no doubt that chilling of milk is a treatment which renders the milk marketable. Consequently by virtue of the chapter note, chilling of milk amounts to manufacture and it is settled law that process amounting to manufacture is not liable to service tax - demand not sustained - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Classification of service provided as Business Auxiliary Service
- Applicability of noscitur sociis principle in interpreting scope of "any other treatment"

Classification of service provided as Business Auxiliary Service:
The appeals were filed against an order-in-original passed by the Commissioner (Appeals), Central Excise, Jaipur, where the appellant, providing chilling facilities to a dairy cooperative, had been levied service tax under Business Auxiliary Services. The Tribunal referred to a previous case involving Sharma Ice Factory where it was observed that chilling of milk amounts to a treatment rendering the product marketable, thus constituting manufacture and not liable to service tax. The Tribunal emphasized that chilling of milk is a treatment making the product marketable, aligning with Chapter Note 6 to Chapter 4. The Tribunal rejected the argument that noscitur sociis principle should be applied to limit the scope of "any other treatment" under the definition of Business Auxiliary Services. It was concluded that chilling of milk amounts to manufacture and is not liable to service tax, overturning the impugned order.

Applicability of noscitur sociis principle in interpreting scope of "any other treatment":
The Tribunal analyzed the argument raised by the Revenue that the noscitur sociis principle should be applied to interpret the scope of "any other treatment" under the definition of Business Auxiliary Services. The Tribunal disagreed with this contention, stating that labelling, relabelling, and repacking mentioned in the chapter note do not necessarily form a family with "any other treatment." It was clarified that the definition of "any other treatment" is limited to treatments adopted to render the product marketable to consumers. The Tribunal concluded that the noscitur sociis principle was not applicable in this case, as chilling of milk was a treatment making the product marketable, aligning with the definition of manufacture and not liable to service tax. The impugned order was set aside, and the appeals were allowed based on the Tribunal's reasoning in the appellant's own case.

This detailed analysis of the judgment highlights the Tribunal's interpretation of the classification of services provided and the application of legal principles in determining the tax liability, providing clarity on the treatment of chilling facilities under the ambit of Business Auxiliary Services.