Post-cultivation processing of agricultural produce remained exempt where the essential character of flowers was unchanged.

Exemption under Notification No. 14/2004-ST was upheld for picking and choosing flowers supplied by customers for further production of dried flowers, because the service was rendered in relation to agricultural produce. The activity followed cultivation, did not alter the essential character of the flowers, and involved only limited processing to make the produce marketable. The finding that the service remained connected with agricultural produce was not displaced by any sustainable revenue challenge, so the exemption was rightly allowed and the assessee's entitlement was sustained.

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Issues: Whether the service of picking and choosing flowers supplied by customers for enabling further production of dried flowers was exempt under Notification No. 14/2004-ST dated 10.09.2004 as a service in relation to agricultural produce.

Analysis: The exemption had been denied on the premise that the activity was not in relation to agriculture. The appellate authority found that the service was rendered with reference to flowers, which are agricultural produce, and that the activity followed cultivation without altering the essential characteristics of the product, the limited processing being only to make it marketable. The Revenue did not raise any sustainable ground to dislodge that finding, and the post-cultivation nature of the activity did not justify denial of the exemption.

Conclusion: The exemption was rightly allowed and the Revenue's challenge failed.

Final Conclusion: The appeal was dismissed, and the assessee's entitlement to the exemption was upheld.

Ratio Decidendi: A post-cultivation activity involving agricultural produce does not lose exemption merely because it is performed to make the produce fit for market, where the essential character of the produce remains unchanged.

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