Pre-deposit relief in sugarcane harvesting transport dispute denied after prima facie ineligibility for service tax exemptions.

Service tax relief on harvesting and transportation of sugarcane was examined against Notification No. 13/2003-S.T. and Notification No. 14/2004-S.T.; the service was treated prima facie as transportation and harvesting work for a sugar factory, not a covered transaction relating to sale or procurement of agricultural produce, and not shown to be a service in relation to agriculture. The record also did not establish pure agent status for the appellants in relation to the harvesting or transport contractors. On that basis, complete waiver of pre-deposit was declined and 50% of the adjudged service tax was directed to be deposited, with the balance waived on compliance.

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Issues: Whether the appellants had made out a prima facie case for complete waiver of pre-deposit in a service tax dispute arising from harvesting and transportation of sugarcane.

Analysis: The service was prima facie found to be harvesting and transportation of sugarcane to the sugar factory, not a transaction in relation to sale or procurement of agricultural produce for the purpose of Notification No. 13/2003-S.T. The benefit of Notification No. 14/2004-S.T. was also held to be unavailable, as the service was rendered to a sugar factory and not shown to be in relation to agriculture. The record did not show that the appellants were acting as pure agents on behalf of the harvesting or transport contractors. In these circumstances, complete waiver was declined.

Conclusion: The appellants were directed to deposit 50% of the adjudged service tax, with waiver of the balance and stay of recovery on compliance.

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