2014 (8) TMI 268 - AT - Service Tax

Waiver of pre-deposit of service tax - Business Auxilliary service - Supply of inputs to sugar cane factory - Held that - applicants are acting as an agent on behalf of cane growing farmers for providing service to the sugar factory in relation to the procurement of goods or services which are inputs for the client. The amounts in question are in respect of the harvesting and transportation of the sugar cane to the factory and activity undertaken by the commission agent in relation to the sale and purchase of agricultural produce is exempted from service tax as per Notification no. 13/03-ST dt.20.06.2003 as amended. In view of the above, prima facie we find that the applicants have made out a strong case in their favour. Therefore, the pre-deposit of dues are waived and recovery of the same is stayed during the pendency of the appeal - Stay granted.

Summary

Issues:
1. Application for waiver of pre-deposit of service tax amount.
2. Classification of services provided by the applicant.
3. Applicability of exemption under Notification no. 13/2003-ST.
4. Interpretation of the role of the applicant as an intermediary or agent.

Analysis:
The appellant filed an application seeking the waiver of pre-deposit of service tax, interest, and penalties amounting to Rs. 3,26,31,474. The demand was confirmed on the grounds that the appellant provided Business Auxiliary Services without paying the appropriate service tax. The appellant contended that their activities involved cutting, harvesting, and transportation of sugar cane, which were classified under Business Auxiliary Service by the Tribunal in a previous case. The current demand was based on amounts received from a sugar factory for services beyond the core activities related to sugar cane. The Revenue alleged that the appellant acted as an intermediary or agent for the sugar factory, supplying inputs classified under Business Auxiliary Service.

Upon reviewing the show cause notice and adjudication order, it was noted that the appellant was described as acting on behalf of cane growing farmers to provide services to the sugar factory. The amounts in question were related to activities exempted from service tax under Notification no. 13/2003-ST, which pertains to commission agent services in the sale or purchase of agricultural produce. The Tribunal found that the appellant's activities aligned with the exemption criteria specified in the notification, as they were involved in the harvesting and transportation of sugar cane, akin to a commission agent's role in agricultural produce transactions. Consequently, the Tribunal ruled in favor of the appellant, waiving the pre-deposit of dues and staying the recovery during the appeal process.

In conclusion, the judgment centered on the proper classification of services provided by the appellant, the applicability of a specific service tax exemption notification, and the interpretation of the appellant's role as an intermediary or agent in the context of service tax liability. The Tribunal's decision to waive the pre-deposit and stay recovery highlighted the alignment of the appellant's activities with the exemption criteria, emphasizing the importance of accurate classification and understanding of service tax implications in such cases.