2017 (9) TMI 163 - AT - Service Tax

Business Auxiliary services - N/N. 14/2004-ST dated 10/09/2004 - whether the services of harvesting and transportation of sugarcane and consideration received there against as Sanugraha Anudan (commission) is taxable under Business Auxiliary Service and whether the exemption Notification No.14/2004-ST dated 10/09/2004 exempts the said service? Held that - notification says that the commission in relation to sale and purchase of agricultural produce are exempted from service tax - In the present case, the services of harvesting and transportation is in relation to supply of sugarcane, which is agricultural produce. As per the explanation the agricultural produce should not undergo the alter of its essential characteristics. The sugarcane which was harvested is supplied to sugar factory without bringing any alteration in its essential characteristics. Therefore, the services provided by the appellant is squarely covered by this notification - It is also observed that even the N/N.14/2004-ST dated 10/09/2004 also exempts the Business Auxiliary Services provided in relation to agricultural produce. The service provided by the appellant, i.e., harvesting and transportation of sugarcane for supply to sugarcane factory is exempted - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Whether services of harvesting and transportation of sugarcane and consideration received as "Sanugraha Anudan" are taxable under Business Auxiliary Service and if exemption Notification No.14/2004-ST dated 10/09/2004 applies.

Analysis:

Issue 1: Taxability of Services
The appellant argued that the services provided are exempted under Notification No.13/2003-ST dated 20/06/2003. They also contended that the services are exempted under Notification No.14/2004-ST dated 10/09/2004. The Tribunal noted that in a previous case involving the same service, the demand was set aside, indicating a favorable precedent. The Tribunal referenced the definitions in the notifications to determine that services related to agricultural produce, without altering its essential characteristics, are exempt from service tax.

Issue 2: Exemption Notifications
Notification No.13/2003-ST dated 20/06/2003 exempts commission agents in relation to the sale or purchase of agricultural produce from service tax. The Tribunal found that the services of harvesting and transporting sugarcane, being an agricultural produce, fell within the scope of this exemption. Additionally, Notification No.14/2004-ST dated 10/09/2004 provides an exemption for Business Auxiliary Services related to agricultural produce, including procurement, production, and provision of services incidental to specified activities.

Conclusion:
The Tribunal concluded that the services provided by the appellant, involving harvesting and transportation of sugarcane for supply to a sugar factory, were exempted under the relevant notifications. Therefore, the impugned order confirming the demand, interest, and penalty was set aside, and the appeal was allowed on 28/08/2017.