Services of digging bore wells for farmers exempt from tax under Finance Act. Evidence supports agriculture link.

The Tribunal ruled in favor of the appellant, holding that the services of digging bore wells for farmers are exempt under Section 66D(d)(i) of the Finance Act, 1994. The Tribunal found the evidence provided by the appellant, including land records, affidavits, and certificates, to be sufficient in proving that the services were directly related to agriculture operations. Additionally, referencing a clarificatory letter from the Finance Minister and a Supreme Court ruling, the Tribunal determined that such activities are integral to agriculture and fall under the Negative List entry, thus exempt from tax liability. The appeal was set aside, restoring the original decision in favor of the appellant.

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Issues:
1. Whether the services provided by the appellant, i.e., digging of bore wells, are exempt under Section 66 D(d)(i) of the Finance Act, 1994.

Analysis:
The appellant was engaged in providing drilling services and bore wells, not paying service tax amounting to Rs. 39,15,178 from October 2013 to March 2017. The Adjudicating Authority dropped the demand, citing the exemption under Section 66D(d)(i) for services directly provided to farmers for agriculture operations. The Revenue appealed, arguing that digging wells and bore wells do not fall under "Agriculture Operations" and are taxable. The Commissioner (Appeals) noted the lack of evidence supporting the appellant's contentions and reversed the decision, confirming the tax demand and penalties under various sections.

The appellant contended that the activities of digging bore wells for farmers are exempt, emphasizing the sufficiency of evidence presented. The appellant provided land records, affidavits from service receivers, and certificates from the Village Panchayat Sarpanch listing farmers who received services and payments made. The Tribunal found the evidence valid and criticized the lower court for arbitrarily rejecting it, contrary to the Finance Act and rules.

Moreover, the appellant referenced a clarificatory letter from the Finance Minister stating that drilling bore wells for farmers falls under the Negative List Entry of Section 66 D(d)(i), exempting it from tax liability. Relying on the Supreme Court ruling in a related case, the Tribunal concluded that activities like irrigation are integral to agriculture and fall under the Negative List, exempt from tax. Consequently, the Tribunal set aside the appeal, restoring the original order in favor of the appellant and granting consequential benefits as per the law.

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