Chilling milk not taxable under Service Tax

The Tribunal allowed the appeal by the assessee-appellants, setting aside the order subjecting chilling services for milk to Service Tax. It was determined that chilling milk does not constitute production or processing of goods as it does not bring about any change in the raw material. Relying on precedent and the specific circumstances of the case, the Tribunal concluded that the chilling services provided to the company were not liable to Service Tax.

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Issues involved:
Service tax on chilling of milk services provided to a company

Analysis:
The appeal was filed by the assessee-appellants against the Order-in-Original passed by the Commissioner of Central Excise, Jaipur, pertaining to the period from 1-4-2006 to 30-9-2010. During this period, the assessee-appellants were providing chilling services for milk to a specific company, which the Department subjected to Service Tax. The Tribunal referred to a previous case, Sharma Ice Factory v. CCE, Jaipur-I, where it was established that chilling milk to a temperature below 5 degrees Celsius for long-distance transportation does not constitute production or processing of goods. The Tribunal cited the Apex Court's judgment in Commissioner of Income Tax v. N.C. Budharaja & Co., emphasizing that for "production," there must be a change in the raw material subjected to a process. As chilling milk does not bring about any change in the milk itself, it was concluded that it does not amount to production or processing of goods. The Tribunal also noted that the Commissioner (Appeals) had previously held that chilling of milk is not covered under Business Auxiliary Service. Therefore, the impugned order subjecting the chilling services to Service Tax was set aside, and the appeal by the assessee-appellants was allowed based on the precedent and the specific circumstances of the case.

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