Tribunal rules chilling milk not business auxiliary service, exempts from service tax under Chapter Note 6

The Tribunal upheld the appeal against a service tax demand for chilling milk, ruling that it does not fall under business auxiliary service. The decision was based on interpreting Chapter Note 6, which exempts processes amounting to manufacture from service tax. The Tribunal found that chilling milk renders it marketable and rejected the Departmental Representative's argument that noscitur sociis principle applies. The impugned order was set aside, and the appeal was allowed.

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Issues:
Appeal against service tax demand for chilling of milk under business auxiliary service - Interpretation of Chapter Note 6 to Chapter 4 of Central Excise Tariff - Applicability of noscitur sociis principle.

Analysis:
The appellant appealed against a service tax demand of Rs. 4,98,805 for chilling milk for a dairy cooperative. The advocate argued that chilling of milk amounts to manufacturing, exempting it from service tax. Referring to a previous judgment, it was contended that chilling of milk is not a business auxiliary service. The Departmental Representative (DR) argued that chilling of milk falls under business auxiliary service as per Chapter Note 6, rejecting the precedent judgment's value.

The Tribunal acknowledged the previous judgment's finding that chilling of milk does not constitute manufacturing, leading to a successful appeal. The Tribunal emphasized that chilling of milk renders it marketable, aligning with Chapter Note 6, which exempts processes amounting to manufacture from service tax. The Tribunal disagreed with the DR's interpretation of noscitur sociis, stating that the principle does not apply due to the clear language of Chapter Note 6, which specifies treatments to make products marketable.

In conclusion, the Tribunal upheld the appeal, following the reasoning in the previous judgment that chilling of milk does not fall under business auxiliary service. The decision was based on the interpretation of Chapter Note 6 and the absence of ambiguity in its language, rendering the noscitur sociis principle inapplicable. The impugned order was set aside, and the appeal was allowed.

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