9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (1) TMI 767 - HC - Service TaxLiability of service tax - GTA service - petitioners availing the service of transportation of the tea - interpretation of statute - whether after the tea leaf had been put through the process of withering, crushing, roasting and fermentation it continued to be agricultural produce? - Held that - The tea leaf remained what it always was. It was tea leaf when selected and plucked. and it continued to be tea leaf when after the process of withering, crushing and roasting it was sold in the market. The process applied was intended to bring out its potential qualities of flavour and colour. The potential inhered in the tea leaf from the outset when still a leaf on the tea bush. The potential surfaced in the tea leaf when the mechanical processes of withering, crushing and roasting, fermenting by covering with wet sheets and roasting again were applied. The tea leaf was made fit for human consumption by subjecting it to those processes. At no stage. did it change its essential substance. It remained a tea leaf throughout. In its basic nature, it continued to be agricultural produce. In the instant case, it is taken note of that the expression agricultural produce appearing in entry 21(a) of the Notifications No. 3/2013-ST dated 01.03.2013 and 6/2015-ST dated 01.03.2015 are issued under the provisions of the Finance Act of 1994, where Section 65B(5) of the Finance Act of 1994 defines agricultural produce as such - agricultural produce means any produce of agriculture on which either no furtherer processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. - As the expression agricultural produce has been defined in the Finance Act of 1994 and the concerned notifications, wherein the said expression appears are also issued under the provisions of the said Act of 1994, it has to be understood that the expression agricultural produce used in the two notifications are not used in a similar context as prevailed in the matter before the Supreme Court in DS Bist 1979 (9) TMI 168 - SUPREME COURT OF INDIA , wherein the said expression was explained and a meaning given to it. From the said point of view, as the expression agricultural produce was used under two different contexts, the meaning given to it in DS Bist in its own context may not be applicable in the present case, where the expression is not only used in a different context, but is also defined for the purpose. The agricultural produce has been defined for the purpose of the Finance Act of 1994 u/s 65B(5) of the Finance Act of 1994. Accordingly, whatever meaning transpires from the definition of the expression agricultural produce given u/s 65B(5) of the Finance Act of 1994 would prevail while interpreting the said expression as it appears under Entry-21(a) of the Notifications No.3/2013-ST dated 01.03.2013 and No.6/2015-ST dated 01.03.2015, which are admittedly issued u/s 93 of the Finance Act of 1994 - When the definition of agricultural produce as it appears u/s 65B(5) of the Finance Act of 1994, is examined, it is discernible that agricultural produce means any produce of agriculture on which either no further processing is done or such processing is done as is usually done by a cultivator or producer, which does not alter its essential characteristic, but makes it marketable for primary market. The elements as appears in the definition of agricultural produce u/s 65B(5) are that there must either be no further processing done on the produce of agriculture or the processing is done by a cultivator or producer, which does not alter its essential characteristic, but makes it marketable for the primary market. As to whether the expression agricultural produce appearing in Entry 21(a) of the Notifications No. 3/2013-ST dated 01.03.2013 and 6/2015-ST dated 01.03.2015 includes tea or not would have to be understood from the perspective of the definition of the expression agricultural produce as appearing in Section 65B(5) of the Finance Act of 1994 and not from the perspective of the expression agricultural produce as defined and explained in D.S Bist. The principle of interpretation of statutes clearly provides that any interpretation which renders a provision to be irrelevant and redundant is to be avoided. Where a conclusion is already arrived that Entry-21(a) of the Notification No.3/2013-ST dated 0103.2013 did not include tea and the said Entry-21(a) having been retained as it was even after the Notification No.6/2015-ST dated 01.03.2015 was issued, it cannot be stated that tea now stands included within the meaning of the expression agricultural produce as appeared in Entry-21(a) - As a conclusion had already been arrived that Entry-21(a) of the Notification No.3/2013-ST dated 01.03.2013 does not include tea even after the amendment brought in by the Notification No.6/2015-ST dated 01.03.2015, the other contention of the petitioners that where two views are possible, the view in favour of the assessee is to be accepted, is inapplicable in the present case. The contention of the petitioner that tea was included within the meaning of the expression agricultural produce as appearing under Entry- 21(a) of the Notification No.3/2013-ST dated 01.03.2013, and it continues to remain included even after the amendment incorporated by the Notification No.6/2015-ST dated 01.03.2015, the contention of the writ petitioners that they are entitled for an exemption from service tax in respect of its transportation by a goods carriage agency in a goods carrier is found to be unacceptable. Petition dismissed - decided against petitioner.
Issues Involved:
1. Liability of the petitioners to pay service tax under Chapter-V of the Finance Act of 1994 for availing the service of transportation of tea. 2. Validity of demand cum show-cause notices issued under section 73 of the Finance Act of 1994. 3. Interpretation of exemption notifications regarding service tax on transportation of tea. 4. Applicability of the definition of "agricultural produce" in the context of service tax exemption. Detailed Analysis: 1. Liability of the petitioners to pay service tax under Chapter-V of the Finance Act of 1994 for availing the service of transportation of tea: The petitioners, engaged in the business of plantation, manufacture, sale, and transportation of tea, contested the service tax liability on the transportation of tea from their gardens to warehouses. The core issue was whether the transportation of tea by goods transport agencies was subject to service tax under the Finance Act of 1994. Demand cum show-cause notices were issued to various tea estates of the petitioner company, alleging evasion of service tax for different periods. 2. Validity of demand cum show-cause notices issued under section 73 of the Finance Act of 1994: The petitioners challenged the demand cum show-cause notices on the grounds that the notifications in force exempted the transportation of tea from service tax. The notices demanded recovery of service tax, interest, and penalties under sections 73, 75, and 78 of the Finance Act of 1994. The petitioners argued that these notices were issued without authority of law due to the existing exemptions. 3. Interpretation of exemption notifications regarding service tax on transportation of tea: The petitioners relied on several notifications, particularly Notification No.30/2012-ST and Notification No.25/2012-ST, which provided exemptions from service tax for certain services, including the transportation of agricultural produce. The petitioners argued that tea, being an agricultural produce, should be exempted from service tax. They cited the Supreme Court's decision in Commissioner of Sales Tax, Lucknow vs. M/s D.S. Bist and Sons, which held that tea, in its basic nature, is an agricultural produce. 4. Applicability of the definition of "agricultural produce" in the context of service tax exemption: The court examined whether the definition of "agricultural produce" under Section 65B(5) of the Finance Act of 1994 applied to tea. The Finance Act defined agricultural produce as any produce of agriculture on which either no further processing is done or such processing is done as is usually done by a cultivator or producer, which does not alter its essential characteristics but makes it marketable for the primary market. The court concluded that the definition of agricultural produce in the Finance Act did not include processed tea, as the processing altered its essential characteristics, making it a finished product for the consumer market. Conclusion: The court held that the exemption notifications did not cover tea as an agricultural produce for the purpose of service tax exemption. The deletion of Entry-21(d) in Notification No.3/2013-ST and its substitution by Notification No.6/2015-ST indicated that tea was no longer exempt from service tax. The court dismissed the writ petitions, stating that the demand cum show-cause notices were valid and the authorities could proceed with them in accordance with the law. The court emphasized that the interpretation of statutory provisions and notifications must align with the legislative intent and definitions provided in the relevant statutes. Judgment: The writ petitions were dismissed, and the demand cum show-cause notices were upheld. The respondents were allowed to proceed with the notices from the date of the judgment, ensuring compliance with legal procedures. No order as to costs was made.
|
