Exemption for commission-agent services in sugarcane harvesting and transport supported waiver of pre-deposit and stay of recovery.

Harvesting and transporting sugarcane by a commission agent was treated as activity connected with the sale of an agricultural product, bringing it within the exemption for Business Auxiliary Service under Notification No. 13/2003-ST. On the recorded facts, sugarcane qualified as an agricultural product and the service was considered exempt for the limited purpose of pre-deposit. Accordingly, pre-deposit of duty, interest and penalty was waived and recovery stayed during the pendency of the appeal.

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Issues: Whether the appellant was entitled to waiver of pre-deposit and stay of recovery on the ground that the activities of harvesting and transporting sugarcane, undertaken as a commission agent, fell within the exemption for Business Auxiliary Service in relation to agricultural products.

Analysis: The adjudicating authority had recorded that the appellant carried out harvesting of sugarcane and its transportation from the farmers' fields to the sugar factory, and that such activity was connected with the sale of sugarcane by farmers and its purchase by the sugar factory. On that factual basis, the service was treated as one rendered by a commission agent. Notification No. 13/2003-ST grants exemption from service tax for Business Auxiliary Service provided by a commission agent in relation to the sale of agricultural products. Sugarcane being an agricultural product, the claimed exemption was found to be applicable at the stage of consideration of pre-deposit.

Conclusion: The appellant was entitled to the benefit of the exemption notification and, accordingly, pre-deposit of duty, interest and penalty was waived and recovery stayed during the pendency of the appeal.

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