Transport exemption for gypsum upheld, while unsupported reimbursement claim in renting receipts failed.
Exemption for transport of chemical fertilizer applied to gypsum handling and transportation, because gypsum was treated as a fertilizer supplying calcium and sulphur; its absence from the Fertilizers (Control) Order, 1985 did not defeat the exemption, so the related service tax demand was set aside. Receipts from renting of immovable property were not shown by any documents to be mere reimbursements, so they remained taxable and the demand was upheld. The appeal succeeded only on the gypsum-related issue, with penalty reduced proportionately and the matter remanded only for recalculation and consequential relief.
Issues: (i) Whether handling and transportation of gypsum for fertilizer use was covered by the exemption for services relating to transport of chemical fertilizer under the relevant notification. (ii) Whether the amounts received towards renting of immovable property were merely reimbursements and therefore not liable to service tax.
Issue (i): Whether handling and transportation of gypsum for fertilizer use was covered by the exemption for services relating to transport of chemical fertilizer under the relevant notification.
Analysis: The relevant exemption under Notification No. 5/2012-ST, as amended by Notification No. 3/2013-ST, applied to services provided by a goods transport agency by way of transport of chemical fertilizer, organic manure and oil cakes. Gypsum was found to be a fertilizer supplying calcium and sulphur, and the mere absence of gypsum from the Fertilizers (Control) Order, 1985 did not exclude it from the exemption. The exclusion urged by the department was therefore not accepted.
Conclusion: The exemption was available to the appellant for the gypsum handling and transportation service, and the service tax demand on that component was set aside.
Issue (ii): Whether the amounts received towards renting of immovable property were merely reimbursements and therefore not liable to service tax.
Analysis: The claim that the receipts were only reimbursements was not supported by any documents before the lower authorities or before the Tribunal. In the absence of documentary proof, the receipts could not be treated as mere reimbursements.
Conclusion: The demand relating to renting of immovable property was upheld.
Final Conclusion: The appeal succeeded only to the extent of the gypsum-related demand, with the corresponding penalty reduced proportionately, while the remaining demand was sustained and the matter was sent back only for recalculation and consequential relief.
Ratio Decidendi: A service falling within the substantive ambit of a statutory exemption cannot be denied the benefit merely because the commodity is not expressly named in a control order, where the commodity is in fact a fertilizer for the purpose of the exemption.
TaxTMI 
AI Drafter ✕
TaxTMI 
