Appellant must pay service tax on transporting flavoured milk as it doesn't qualify as unprocessed milk

The tribunal held that the appellant is not exempt from paying service tax for Goods Transport Agency services used in transporting flavoured milk, as flavoured milk does not qualify as unprocessed milk under the relevant exemption notification. The appellant's argument that flavoured milk should be considered as milk was not accepted, and the tribunal directed the appellant to make a specified deposit within a set period. Failure to comply would result in non-waiver of pre-deposit for remaining dues and potential recovery actions. Compliance with the deposit deadline would lead to a stay on recovery during the appeal process.

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Issues involved:
Whether the appellant is liable to pay service tax for GTA services availed for transporting flavoured milk.

Analysis:
The common issue in both appeals is whether the appellant is required to pay service tax for GTA services used in transporting flavoured milk. The appellant sought exemption under Notification No. 33/2004-ST, which exempts services provided by Goods Transport Agency for transporting fruits, vegetables, eggs, or milk by road. The crux of the matter lies in determining whether flavoured milk qualifies as milk. The appellant argued that flavoured milk should be considered as milk, citing a previous decision by the High Court. However, the respondent contended that the exemption applies only to unprocessed goods, and once processed, like flavoured milk, the exemption does not apply. Reference was made to a case where sweetened flavoured milk was deemed distinct from liquid milk. The ambiguity arises from whether the term "milk" encompasses flavoured milk, given that the exemption covers unprocessed items. The classification of milk under different chapters further complicates the issue, with the respondent suggesting that flavoured milk may not fall under the relevant chapter. The tribunal acknowledged the need for detailed analysis during the final hearing, concluding that the appellant failed to establish a prima facie case.

The tribunal directed the appellant to deposit a specified amount within the stipulated period, with the understanding that compliance would lead to a waiver of pre-deposit for the remaining dues and a stay on recovery during the appeal's pendency. The decision was pronounced in open court, emphasizing the importance of the appellant meeting the deposit deadline and reporting compliance by a set date.

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