2017 (12) TMI 165 - AT - Service Tax

Business Auxiliary Service - loading, unloading of receipts of soyabean seed and other materials, stacking loading into the feeding points, filling, weignment, stitching, staking, de oiled cake, loading the cake in truck etc. - case of appellant is that the SCN did not make a specific allegation to the fact under what category of Business Auxiliary Service, the appellants are liable to pay service tax - Held that - the Revenue could not make up their mind as to which category of BAS will apply to the activities of the appellants. Admittedly, the appellants carried out a whole range of activities loading, unloading of raw materials and up to loading de oiled cake for despatch - It is necessary to identify such activities for a tax liability under BAS. Admittedly, neither SCN nor the lower authorities could arrive at definitive conclusion in this regard - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Taxability of services provided under Business Auxiliary Service.
2. Specificity in show cause notice for tax liability.
3. Interpretation of activities related to manufacturing for tax liability.

Analysis:
1. The appeal addressed the taxability of services provided by the appellants to two clients in connection with manufacturing activities. The Revenue contended that these activities fell under Business Auxiliary Service as per Section 65(19) of the Finance Act, 1994. The original authority confirmed a service tax liability of &8377; 5,88,665 and imposed penalties. On appeal, the Commissioner (Appeals) upheld the original order.

2. The appellant challenged the order, arguing that the show cause notice lacked specificity regarding the category of Business Auxiliary Service under which they were liable to pay service tax. The original authority based the tax liability on activities incidental to the production of goods by the clients, while the impugned order deemed the appellants' actions as aiding in the procurement of goods, falling under Business Auxiliary Services. The appellant contended that without a clear proposal for tax liability, the proceedings were flawed, and their supply of labor for manufacturing work should not be categorized as BAS. Additionally, they disputed the demand on grounds of limitation.

3. The Tribunal noted that the Revenue failed to determine the specific category of Business Auxiliary Service applicable to the appellants' activities, which included a range of tasks from loading and unloading raw materials to loading de-oiled cake for dispatch. The lack of clarity in the show cause notice and differing interpretations by the lower authorities rendered the proceedings unsustainable. The notice proposed a demand without specifying the tax category, with the original order citing clause (vii) of Section 65(19) while the first appellate authority held liability under clause (iv) for procurement of goods or services as inputs for the client, which the appellants did not perform. Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellants due to the vague proposal and inconsistent analysis by the lower authorities.