2016 (11) TMI 584 - AT - Service Tax

Waste Water Treatment Services Exempt from Service Tax Under Existing Regulatory Guidelines

M/s. Odyssey Organics P. Ltd. Versus Commissioner of Central Excise, Raigad

CESTAT Mumbai allowed an appeal against a service tax demand for industrial waste water treatment. The Tribunal ruled that waste water treatment does not ... Demand - business auxiliary services - processing disposable waste water and releasing the same through common drainage into common effluent treatment plant will amount to services rendered to a client for processing of goods? - Held that: - It is also to be noted and is a common knowledge that disposal of waste water in the common effluent treatment plant of Maharashtra pollution control board, needs to adhere specifications acceptable for such disposal, which are achieved by the treatment undertaken by the appellant. We notice that treatment of effluent waste cannot be considered as processing of the goods by any stretch of imagination, and we also note that the show cause notice does not invoke specific clause of the definition of Business Auxiliary Services for levy of tax - Impugned order is set aside and appeal is allowed. The CESTAT Mumbai, in appeal against Order-in-Original No. US/281/RGD/2012, addressed the issue of service tax demand under 'business auxiliary services' for treatment of industrial waste water by the appellant for Apte Organic Pvt. Ltd. Both lower authorities had held that such treatment amounted to 'services rendered to a client for processing of goods.'The Tribunal examined the appellant's activity of treating industrial waste water before releasing it into a common effluent treatment plant and relied on CBEC Circular No. 137/111/2007-CX4 (dated 13 July 2007), which clarified that incineration/shredding of biomedical waste does not qualify as 'processing of goods.' Applying this analogy, the Tribunal found that the appellant's treatment of waste does not constitute processing of goods on behalf of the client.The Tribunal further relied on precedents-Bharuch Enviro Infrastructure Ltd. (2008 (12) STR 622), Globe Enviro Care Ltd. (2011 (21) STR 241), and Ferro Scrap Nigam Ltd. (2014 (36) STR 955)-to support this view. It emphasized that the treatment is aimed at meeting regulatory specifications for disposal, not processing goods, and noted that the show cause notice did not invoke any specific clause under the definition of Business Auxiliary Services.Concluding that the impugned order was 'unsustainable,' the Tribunal set it aside and allowed the appeal.