Business Auxiliary Services tax demand on tobacco threshing and re-drying was found unsustainable after prior Bench ruling.

Service tax on threshing and re-drying operations of tobacco leaves was held not sustainable under Business Auxiliary Services. The dispute concerned whether these processing activities created a taxable service liability for the relevant period. Relying on an earlier common final order of the same Bench on an identical issue, the Bench found that such operations did not attract service tax under that category. As a result, the demand, interest and penalties were set aside as unsustainable.

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Issues: Whether service tax demand, interest and penalties were sustainable on threshing and re-drying operations of tobacco leaves under the category of Business Auxiliary Services.

Analysis: The dispute related to confirmation of service tax demand for the period April 2013 to March 2014 on threshing and re-drying operations of tobacco leaves. An identical issue had already been decided by the same Bench in a common final order, holding that service tax liability did not arise under Business Auxiliary Services. Following that view, the impugned order was found unsustainable.

Conclusion: The demand, interest and penalties were not sustainable under Business Auxiliary Services, and the appeal succeeded.

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