Tribunal grants waiver for co-op society on tax dispute involving sugar cane procurement

The Tribunal granted a waiver of pre-deposit of dues for the admission of the appeal in a case involving a co-operative society and the Revenue. The society's arrangement with farmers for sugar cane procurement was contested as a taxable service of Manpower Supply under the Finance Act, 1994. The Tribunal found that there was a lack of established consideration for the service provided by the society, leading to the stay of collection of dues pending appeal. The society's role was deemed limited to facilitating payments between farmers and labourers without receiving additional fees for the service.

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Issues:
1. Whether the arrangement between a co-operative society and farmers for sugar cane procurement constitutes a taxable service of Manpower Supply under the Finance Act, 1994.
2. Whether the co-operative society is liable to pay service tax on the service provided.
3. Whether the co-operative society should make a pre-deposit of dues as demanded by the Revenue.

Analysis:
1. The case involved a co-operative society engaged in sugar manufacturing, which had an arrangement with farmers for sugar cane procurement in Tamil Nadu. The Revenue contended that this arrangement amounted to a service of Manpower Supply under the Finance Act, 1994. The Revenue demanded service tax for the period April '06 to March '11, which was confirmed against the co-operative society. The society appealed the order, arguing that they merely facilitated payments from farmers to labourers and did not receive any extra consideration for the service. The society maintained that the labourers were not their employees, and they did not have the manpower to supply. The Tribunal considered the lack of established consideration for the service and granted a waiver of pre-deposit of dues for the admission of the appeal, following a precedent order.

2. The co-operative society contended that they did not receive any consideration for the activity of facilitating sugar cane harvesting between farmers and labourers. They clarified that their role was limited to routing payments from farmers to labourers and that they did not charge any additional fees for the service. The society highlighted that they were not directly involved in the employment or management of the labourers, and the farmers authorized them to deduct charges from payments due to the labourers. The Tribunal, considering the absence of established consideration for the service provided, granted a waiver of pre-deposit of dues for the admission of the appeal, in line with a previous order.

3. The Revenue argued that the co-operative society organized the service of cane cutters for farmers and made payments to the labourers, thereby asserting that the society should be liable to pay service tax on this service. Despite the Revenue's contention, the Tribunal observed that there was a lack of established consideration for the service provided by the society. The Tribunal noted that the society did not receive any direct consideration for the activity and granted a waiver of pre-deposit of dues for the admission of the appeal, following a similar precedent order. As a result, the Tribunal stayed the collection of dues during the pendency of the appeal, considering the prima facie lack of consideration for the service provided by the co-operative society.

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