2009 (4) TMI 96 - AT - Service Tax

Appellate tribunal rules in favor of M/s. Agarwal Distillers Pvt. Ltd., exempting liquor packaging from service tax. Penalty removed.

The appellate tribunal ruled in favor of M/s. Agarwal Distillers Pvt. Ltd., holding that packaging and bottling of liquor is not subject to service tax. ... Taxability of packaging and bottling services - service tax liability on liquor packaging - penalty for alleged service tax demand - precedential effect of a High Court Larger Bench decisionTaxability of packaging and bottling services - service tax liability on liquor packaging - precedential effect of a High Court Larger Bench decision - Packaging and bottling of liquor is not liable to service tax. - HELD THAT: - The Tribunal allowed the assessee's appeal holding that the question of taxability of packaging and bottling of liquor has been settled by the Larger Bench of the Madhya Pradesh High Court in Writ Petition No. 696/2008 by order dated 20.3.2008, which held that such activity is not liable to service tax. In view of that binding decision the impugned order sustaining tax liability was set aside and the appeal filed by M/s. Agarwal Distillers Pvt. Ltd. was allowed. [Paras 2]Assessee's appeal allowed; activity of packaging and bottling of liquor held not liable to service tax.Penalty for alleged service tax demand - Validity of penalty imposed in respect of the service tax demand. - HELD THAT: - The department's appeal against the lower appellate authority's order, which had dropped the penalty, was considered. The Tribunal dismissed the department's appeal, thereby upholding the lower appellate authority's decision to drop the penalty. [Paras 2]Department's appeal dismissed; penalty stood dropped by the lower appellate authority and is not sustained.Final Conclusion: The Tribunal, following the Larger Bench decision of the Madhya Pradesh High Court, set aside the tax demand relating to packaging and bottling of liquor and allowed the assessee's appeal; the department's appeal against the dropping of penalty was dismissed. The appellate tribunal ruled in favor of M/s. Agarwal Distillers Pvt. Ltd., stating that packaging and bottling of liquor is not liable to service tax. The penalty imposed by the department was dropped. The decision was based on a previous ruling by the Hon'ble M.P. High Court. The appeal by M/s. Agarwal Distillers was allowed, while the appeal by the department was dismissed.