Packaging and bottling of liquor as manufacture excludes service tax under business auxiliary services.

Packaging and bottling of alcoholic liquor, together with related plant operations, was treated as manufacture under section 2(f) of the Central Excise Act, 1944. As a result, the same activity could not be taxed again as business auxiliary services under service tax law, and the contrary earlier view was held no longer good law. The tax demand and consequential levy were therefore unsustainable.

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Issues: Whether packaging and bottling of alcoholic liquor amounts to manufacture under section 2(f) of the Central Excise Act, 1944 so as to exclude the activity from service tax under business auxiliary services.

Analysis: The activity undertaken by the appellant consisted of bottling and packaging of liquor, together with related operations at the plant. The Tribunal followed the Larger Bench view that such activity falls within the ambit of manufacture under section 2(f) of the Central Excise Act, 1944. Once the activity is treated as manufacture, it cannot be brought within the service tax net as business auxiliary services. The earlier view contrary to this position was treated as no longer good law.

Conclusion: Packaging and bottling of liquor is manufacture and does not attract service tax under business auxiliary services; the demand was unsustainable.

Final Conclusion: The tax demand and consequential levy were set aside and the appeal succeeded on the principal issue.

Ratio Decidendi: An activity constituting manufacture under section 2(f) of the Central Excise Act, 1944 cannot simultaneously be taxed as business auxiliary services under the service tax law.

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