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TMI Blog2025 (1) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... 06.2005 which amended the previous Notification No. 14/2004 dated 10.09.2004 with respect to exemption to specified services in relation to Business Auxiliary Service - Circular No. 143/12/2011 dated 26/5.2011 which clarifies that the agricultural produce when subject to processing if retain their essential characteristics at the output stage, the process undertaken on or behalf of client should be considered as covered by the expression in relation to the agriculture . Cleaning and grading service - HELD THAT:- The cleaning and grading activity was for few of the agricultural products which were warehoused by the appellants for their clients and that this activity did not change the essential characteristics of the agricultural product sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warehousing services and have been exempted from the levy of service tax. In view thereof, the handling and transport of agricultural produce was also not taxable even prior 1.07.2012 hence the demand is held to have been wrongly confirmed. Conclusion - The two activities are held to be part of one service i.e. storage and warehousing of agricultural produce. The said composite activity is out of service tax net for pre as well as post negative list period, hence it is held that even partial demand of Rs.3,66,314/- has wrongly been confirmed by the adjudicating authority below. Appeal allowed. - HON BLE DR. RACHNA GUPTA, MEMBER ( JUDICIAL ) And HON BLE MRS. HEMAMBIKA R. PRIYA, MEMBER ( TECHNICAL ) Shri Ajay K. Mishra, Advocate for the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivities of: i) cleaning and grading holding it to be Business Auxiliary Service being provided by the appellants ii) Handling and Transportation of goods holding it to be Cargo Handling Service. The appeals against the said order had been rejected vide Order-in-Appeal (O-I-A) bearing no. 1199/2018 dated 30.10.2018 being aggrieved the appellant is before this Tribunal. 3. We have heard Shri Ajay Kumar Mishra, learned Advocate for the appellant and Shri Anand Narayan, learned Authorised Representative for the department. 4. Learned Counsel for the appellant has submitted the activities of Cleaning Grading and Handling Transportation are integral and ancillary to the principal activity of Storage and Warehousing of agricultural produce, hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no denial to the fact that appellant is provided warehouses and storage facilities of the agricultural produced, we observed that demand has been confirmed holding that cleaning and grading activity amounts to providing business auxiliary service and handling transportation activity was taxable prior 1.7.2012 whereafter it got covered under negative list provided under section 66 (d) of amended Finance Act. 6.2 Formost we look into the definition of Business Auxiliary Service under section 65 (19) of the act and taxable under section 65 (105) (zzb) of the act which means any service in relation to, - (i) Or (ii) or (iii) or (iv) or (v) production or processing of goods for or on behalf of the client or (vi) or and includes services as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing out an intermediate production process as job work in relation to agriculture. With effect from 1.7.2012 the negative list under section 66D clause (v) of the act exempts the entire gamut of services related to agricultural produces. 6.7 The Hon ble Apex Court in the case of Commissioner v. M.L. Agro Products Ltd. 2018(16) G.S.T.L. J76 (S.C.) has held that threshing and redrying of tobacco leaves, being an activity in relation to agriculture is covered under entry production of goods on behalf of client in relation to agriculture which is entitled for exemption under Notification No. 14/2004-S.T. Hence, Service Tax is not payable C.B.E. C. Circular No. 143/12/2011-S.T. dated 26- 5-2011, also clarifies the same. Thus even with the introd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view thereof, the handling and transport of agricultural produce was also not taxable even prior 1.07.2012 hence the demand is held to have been wrongly confirmed. 6.9 Above all both the activities i.e. cleaning and grading and handling and transportation of agricultural produce to be stored and warehoused constitute a composite but single service. The TRU clarification dated 28.2.2006 also clarifies that a composite service, even if it consists of more than one service, should be treated as single service based on main or principal service and be accordingly classified. The guiding principal is to identify the essential feature of the transaction. The method of charging doesn t in itself determine whether the service provider is a single ..... X X X X Extracts X X X X X X X X Extracts X X X X
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