Pharma manufacturer wins tax case on conversion charges for excisable goods

M/s. Rugby Pharma Pvt. Ltd. Versus Commr. of Service Tax, Kolkata

M/s. Rugby Pharma Pvt. Ltd. Versus Commr. of Service Tax, Kolkata - TMI Issues involved:
The issue involves whether the appellant, engaged in the manufacturing of pharmaceutical products, is liable to pay service tax under the category of 'Business Auxiliary Services' for receiving conversion charges from a client for manufacturing excisable goods exempted from central excise duty.

Summary:

Issue 1: Liability of the appellant to pay service tax under 'Business Auxiliary Services' category
The Department contended that since neither the appellant nor the client had paid excise duty, the appellant was not entitled to avail benefits under Service Tax Exemption Notification No. 08/2005-ST. Proceedings were initiated to demand service tax for the period April 2005 to March 2006.
Decision: The Tribunal found that the appellant, being a manufacturer of pharmaceutical goods, was not liable to pay service tax under 'Business Auxiliary Services' as the manufacturing activity did not fall under the purview of BAS. The CBEC Circular and a previous Tribunal case supported this view, leading to the setting aside of the demand and allowing the appeal with consequential relief.

Key Points:
- The appellant received conversion charges for manufacturing excisable goods exempted from central excise duty.
- Department claimed appellant was liable for service tax under 'Business Auxiliary Services' due to non-payment of excise duty by both appellant and client.
- Tribunal found appellant's manufacturing activity not covered under BAS, citing CBEC Circular and previous Tribunal case.
- Demand for service tax was set aside, and the appeal was allowed with consequential relief.