2014 (1) TMI 90 - AT - Service Tax

Waiver of pre deposit - Demand of service tax - Business auxiliary service - Eligibility to Notification 13/2003-S.T. - Held that - appellant has undertaken the activity of harvesting sugarcane and its transportation to sugar factory from the fields of farmers and this activity is in relation to sale of sugarcane by farmers and purchase of sugarcane by the sugar factory and service provided of a commission agent. In view of this finding, we find that the appellant is entitled for the benefit of Notification No. 13/2003-S.T., which provides exemption from payment of service tax in respect of service provided under Business Auxiliary Service in relation to the sale of agricultural products - Decided in favour of assessee.

Summary

Issues:
1. Whether the appellant is liable to pay service tax for providing "Business Auxiliary Service" in relation to sugarcane activities.
2. Whether the appellant is entitled to exemption under Notification No. 13/2003-S.T. for services provided as a commission agent for agricultural products.

Analysis:
1. The appellant sought waiver of pre-deposit of duty, interest, and penalties amounting to Rs. 1,43,60,622/-, contending that the service tax was not applicable as they were engaged in harvesting and transporting sugarcane, considered an agricultural product. The impugned order claimed the appellant acted as a commission agent providing "Business Auxiliary Service" for which service tax was due. The appellant argued for exemption under Notification No. 13/2003-S.T., which exempts commission agents dealing with agricultural products from service tax. The Tribunal found that the appellant's activities related to sugarcane were covered under the exemption, as they were involved in the sale and purchase of sugarcane, qualifying for the benefit of the Notification.

2. The respondent argued that the appellant's services included providing manpower, transport of goods, and procurement of inputs for sugar manufacturers, constituting "Business Auxiliary Service" subject to service tax. However, the Tribunal disagreed, emphasizing that the appellant's role as a commission agent in the sale of agricultural products, specifically sugarcane, fell under the purview of the exemption provided by Notification No. 13/2003-S.T. The adjudicating authority's finding supported the appellant's entitlement to the exemption, ultimately leading to the allowance of the appeal and the setting aside of the impugned order.

This judgment highlights the importance of correctly interpreting the scope of services provided in the context of tax liability and the applicability of specific exemptions under relevant notifications. The Tribunal's analysis focused on the nature of the appellant's activities in relation to agricultural products, particularly sugarcane, to determine their eligibility for exemption from service tax under the applicable notification.