Exemption for commission agent services in relation to agricultural products applied to sugarcane harvesting and transport supervision.

Commission received for supervising harvesting and transportation of sugarcane from farmers' fields to the sugar factory was held to fall within the exemption for services rendered by a commission agent in relation to agricultural products. The activity was treated as connected with the sale of sugarcane, an agricultural product, so the business auxiliary service exemption applied. On that basis, the service tax demand was not sustainable and the issue was decided in favour of the assessee.

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Issues: Whether service tax was payable on commission received for supervising harvesting and transportation of sugarcane from farmers' fields to the sugar factory, or whether the activity was covered by the exemption available to services rendered as a commission agent in relation to agricultural products.

Analysis: The activity consisted of harvesting sugarcane and transporting it from the farmers' fields to the factory, and the amount received was treated as commission. The earlier Tribunal view relied upon held that such activity was in relation to the sale of sugarcane, which is an agricultural product, and that the service fell within the exemption granted to business auxiliary service rendered by a commission agent in relation to agricultural products. The same reasoning squarely governed the present appeals.

Conclusion: The service tax demand was not sustainable and the issue was decided in favour of the assessee.

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