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2019 (9) TMI 118 - AT - Service TaxBusiness Auxiliary Services - rendering of services in relation to threshing and redrying of tobacco leaves - GTA Services - HELD THAT - On identical issue was decided by this bench in the case of M.L. AGRO PRODUCTS LTD. VERSUS COMMISSIONER OF CUS., C. EX. S.T., GUNTUR 2017 (2) TMI 1355 - CESTAT HYDERABAD wherein, it was held that service tax liability on threshing and redrying of tobacco leaves does not arise under the category of Business Auxiliary Services. The said judgment of the Tribunal was carried in Civil Appeal by the revenue before the Apex Court and Apex Court dismissed the said Civil Appeal, after condoning the delay - thus, the appeal of the appellant on the issue of tax liability under the category of Business Auxiliary Services stands allowed. GTA services - HELD THAT - The said liability arises and accordingly we uphold the demand of ₹ 34,000/- along with interest on GTA services, but noticing that the appellant could have entertained the bonafide belief that the tax liability may not arise on GTA services, by invoking the provisions of Section 80 of the Finance Act, 1994, we set aside the penalties imposed on appellant. Appeal disposed off.
Issues involved:
1. Demand of service tax under Business Auxiliary Services for threshing and redrying of tobacco leaves. 2. Demand of service tax on GTA Services. Issue 1: Demand of service tax under Business Auxiliary Services for threshing and redrying of tobacco leaves. The appeal was filed against the Order-in-Original regarding the demand of service tax under Business Auxiliary Services for the services related to threshing and redrying of tobacco leaves. The Adjudicating Authority had upheld the demands, rejecting the argument that these activities were related to agriculture. The Tribunal noted a previous judgment in the case of M.L Agro Products Ltd., where it was held that service tax liability on such activities does not fall under Business Auxiliary Services. The Tribunal's decision was upheld by the Apex Court, leading to the current appeal being allowed on this issue. The impugned order was deemed unsustainable and set aside. Issue 2: Demand of service tax on GTA Services. Regarding the demand of service tax on GTA Services, the Tribunal found that the liability indeed arose, and thus upheld the demand of ?34,000 along with interest. However, considering that the appellant could have had a genuine belief that the tax liability might not apply to GTA services, the penalties imposed on the appellant were set aside invoking the provisions of Section 80 of the Finance Act, 1994. The appeal was disposed of accordingly, with the penalties being revoked. This judgment by the Appellate Tribunal CESTAT HYDERABAD addressed two main issues: the demand of service tax under Business Auxiliary Services for threshing and redrying of tobacco leaves and the demand of service tax on GTA Services. The Tribunal ruled in favor of the appellant on the first issue based on a previous judgment upheld by the Apex Court, setting aside the demand under Business Auxiliary Services. However, the demand for service tax on GTA Services was upheld, but penalties were revoked due to the appellant's genuine belief regarding the tax liability.
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