2019 (12) TMI 553 - AT - Service Tax

Business Auxiliary Services - marketing and promotion of pesticides/insecticide - extended period of limitation - HELD THAT - Issue decided in the case of M/S. FRONTIER AGROTECH PVT LTD VERSUS CCE, JAMMU 2018 (8) TMI 1171 - CESTAT CHANDIGARH , where it was held that the services undertaken by the appellant are agriculture extension services which are exempted from payment of duty. Services merit classification of services rendered by the appellant are agriculture extension services which are covered under negative list as per section 65B (4) of the Finance Act, 1994. Therefore, the appellant are not liable to pay service tax. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of service tax, classification of services as Business Auxiliary Service, applicability of exemption for Agriculture Extension Services.

Analysis:

Issue 1: Appeal against demand of service tax
The appellant appealed against an order confirming a service tax demand of ?1,87,66,917 along with interest and penalty. The appellant contended that they were providing Agriculture Extension Services to their principal, which should be exempt from service tax.

Issue 2: Classification of services as Business Auxiliary Service
An audit revealed that the services provided by the appellant were related to marketing and promotion of pesticides, falling under "Business Auxiliary Service" and hence taxable. The appellant contested this classification, arguing that they were engaged in Agriculture Extension Services, which should be exempt from service tax.

Issue 3: Applicability of exemption for Agriculture Extension Services
The Tribunal referred to a previous case involving a sister concern of the appellant, where it was held that the services provided were indeed Agriculture Extension Services exempted from service tax. The Tribunal noted the detailed functions performed by the appellant in disseminating agricultural knowledge and training farmers. It concluded that the services fell under the negative list as per section 65B (4) of the Finance Act, 1994, making the appellant not liable to pay service tax.

In light of the above analysis, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief to the appellant. The judgment emphasized the importance of correctly classifying services and applying relevant exemptions in service tax matters to avoid undue financial burden on service providers.