2018 (10) TMI 971 - AT - Service Tax

Business Auxiliary Service - marketing and promotion of pesticides/insecticide manufactured by their principal - extended period of limitation - Held that - The issue came up before this Tribunal in the case of M/s Frontier Agrotech Pvt Limited 2018 (8) TMI 1171 - CESTAT CHANDIGARH wherein the services in question are identical to the services in hand and this Tribunal held that the services rendered by the appellant are Agricultural Extension Services and are covered under negative list as per Section 66D of the Finance Act 1944. The service in question do qualify as Agricultural Extension Services and are covered under negative list as per Section 66D of the Finance Act 1944 - the appellant is not liable to pay service tax - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against service tax demand, nature of services provided by the appellant, applicability of Business Auxiliary Service, interpretation of Agricultural Extension Services, evidence of services provided, remuneration calculation, tax liability, interpretation of Section 66D of the Finance Act.

Analysis:
The appellant appealed against a service tax demand of ?3,49,66,023 confirmed in an order, which also imposed interest and penalty. The appellant, a service provider to E.I. Dupont India Pvt. Ltd, was observed to be working as a super distributor for pesticides/insecticides, engaging in marketing and promotion, considered taxable under Business Auxiliary Service. A show cause notice was issued invoking the extended period of limitation. The appellant contested, claiming to provide Agricultural Extension Services. The impugned order upheld the demand, concluding the appellant provided Business Auxiliary Services. The appellant cited a similar case before the Tribunal where services were deemed Agricultural Extension Services, not liable for service tax.

The Tribunal analyzed the services provided by the appellant, comparing them to the definition of Agricultural Extension Services. The appellant's services included general farmer training, empirical training, training for harvesting, and stewardship. The Tribunal noted the absence of evidence supporting the appellant's engagement in marketing and promotion, emphasizing the scientific research and knowledge aspect of Agricultural Extension Services. It rejected the Commissioner's finding and held the appellant provided only Agricultural Extension Services, not taxable services.

Regarding remuneration, the Tribunal clarified that the mode of calculation did not imply marketing or promoting the principal's products. The Tribunal highlighted that Agricultural Extension Services are not taxable under Section 66D of the Finance Act, listing operations directly related to agricultural production. As the services qualified as Agricultural Extension Services under the negative list, the Tribunal ruled the appellant was not liable to pay service tax. The Tribunal set aside the impugned order, allowing the appeal in favor of the appellant.