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2022 (5) TMI 77 - AT - Service TaxClassification of services - Business Auxiliary Service or not - Storage and Warehousing Services or not - appellant purchases liquor from distilleries from in and outside State of Karnataka and distribute the same in the State - appellants also store liquor for a maximum period of 90 days without charging any storage fee - period October 2011 to September 2012 - HELD THAT - The case is no longer res integra as submitted by the learned counsel for the appellant - this very Bench in the appellant s own case KARNATAKASTATE BEVERAGES CORPN. LTD. VERSUS COMMR. OF ST, BANGALORE 2007 (8) TMI 55 - CESTAT, BANGALORE has held that there is also no justification for imposing such a savage penalty on a State Government Corporation. In the present case, the appellants have discharged their statutory functions as the mandate given by the Karnataka State Excise Act and Rules thereunder and have not rendered any services such as Business Auxiliary Service and Storage and Warehousing Service . Therefore, the payments received by them in the form of commission or warehousing charges are not exigible to service tax - the impugned orders as far as they relate to the party s appeals are not sustainable and needs to be set aside. Appeal allowed - decided in favor of appellant.
Issues:
1. Whether the amounts collected by the appellants are towards the services rendered under the category of 'Business Auxiliary Service' and 'Storage and Warehousing Services'? 2. Whether the demand raised by the Revenue is justified? 3. Whether the decision of the Commissioner (A) to drop the demand for a specific period is valid? 4. Whether the appellants are liable to pay Service Tax for the services provided? 5. Whether the impugned orders are sustainable? Analysis: 1. The appellants, a government undertaking, are involved in the distribution of liquor in Karnataka. The Revenue contended that the amounts collected by the appellants are for services like 'Business Auxiliary Service' and 'Storage and Warehousing Services'. The Revenue issued show-cause notices for substantial amounts covering different periods. 2. The Commissioner (A) dropped the demand for a specific period based on the Rajasthan High Court's decision. The Revenue appealed against this decision, citing pending review petitions in the Rajasthan High Court. 3. The appellants argued that various judgments have established that they are not liable for Service Tax on the services provided. They highlighted cases like Rajasthan State Beverages Corporation Ltd. vs. CCE and others where similar issues were decided in their favor. 4. The Tribunal examined the nature of the services provided by the appellants and concluded that they were not liable to pay Service Tax. The Tribunal cited precedents and statutory provisions to support its decision, emphasizing that the appellants were fulfilling their statutory functions under the Karnataka State Excise Act. 5. Consequently, the Tribunal allowed the appeals filed by the appellants and dismissed the Revenue's appeal, stating that the impugned orders were not sustainable. The judgment was delivered on 28/04/2022 by the Appellate Tribunal CESTAT Bangalore. This detailed analysis covers the issues raised in the judgment, providing a comprehensive understanding of the legal reasoning and conclusions reached by the Tribunal.
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