Tribunal upholds service tax liability on packaging services, grants cum tax benefit

The Tribunal upheld the service tax liability on packaging services post-cum duty benefit extension. The appellant was found liable for service tax on packing activities and admitted to the liability. The Tribunal allowed cum tax benefit and reduced the demand. It set aside the demand for service tax liability under the lease agreement before the inclusion of renting of immovable property service in the statute from 01/06/2007. The Tribunal considered waiving the penalty based on precedents. The appeal was partly allowed, with liability for service tax and penalty waivers based on legal precedents.

---

---

Issues:
1. Liability for service tax on packaging service
2. Genuine nature of lease agreement and liability for service tax

Analysis:
1. Liability for service tax on packaging service:
The appellant, engaged in blending and packaging tea for another company, was found liable for service tax on the activity of packing under the Packaging Service category. The Department contended that the lease agreement for factory premises was a guise for additional consideration for packing. The appellant admitted the liability for service tax on packing but disputed the Department's stance on the genuineness of the lease agreement. The appellant sought cum duty benefit and argued for liability only from the inclusion of renting of immovable property service in the statute from 01/06/2007.

2. Genuine nature of lease agreement and liability for service tax:
The Tribunal found that the appellant indeed carried out packaging activities for the other company, admitting to the liability for service tax on such activities. The Tribunal allowed cum tax benefit and reduced the demand based on legislative provisions. Regarding the lease agreement, the Tribunal noted the separate inclusion of renting of immovable property service in the statute from 01/06/2007. The Tribunal set aside the demand for service tax liability under the lease agreement before this date. The Tribunal also considered waiving the penalty based on precedents where service tax was paid before the issue of a show cause notice.

In conclusion, the Tribunal modified the impugned order, upholding the service tax demand on packaging service post-cum duty benefit extension. The appeal was partly allowed, considering the liability for service tax and penalty waivers based on legal precedents.

---