Exemption to poultry and related services - egg hatching etc

[MURALIKRISHNA BODDAPATI]

Opinion is sought from learned forum members about the exemption to poultry activity under the negative list vide Sec 65B(3). Here Agriculture is defined to mean the cultivation of plants and rearing of all life forms of animals, except rearing of horses, for food, fibre, fule, raw material or other similar products.In addition, the Educational Guidance Note of CBEC has expressed a view that activities like breeding of fish ( pisciculture), rearing of silk worms ( sericulture), cultivation of ornamental flowers ( fliriculture) and horticulture, forestry are included in the definition of agriculture. Hence in the context of Service Tax, agricultural produce includes ' vegetable produe' as well as 'non agricultural produce' .

Hence it follows by principles of natural justice that hatching of eggs produced by hens into day old chicks which is the central activity in poultry breeding shall qualify for exemption under the negative list. I request the considered views of learned Tax Advocates and Chartered Accountants on this issue.

[Rajagopalan Ranganathan]

Sir,

Section 65 B (3) is only interpretation of various terms used in Finance Act, 1994. Negetive list is contained in Section 66 D of Finance Act, 1994. Section 66 D (d) lists services relating to agriculture or agricultural produce by way of-

(i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or ²[***] testing;

(ii) supply of farm labour;

(iii) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market;

(iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;

(v) loading, unloading, packing, storage or warehousing of agricultural produce;

(vi) agricultural extension services;

(vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce.

Poultry is not mentioned under Section 66 D (d). Therefore Poultry is not covered by Negative List.

However, According to Section 65 B (3) of Finance Act, 1994, " "agriculture" means the cultivation of plants and rearing of all life-forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products."

It is held in the case of Davindar Singh Vs. Wealth Tax Officer [1982 (3) TMI 118 - ITAT CHANDIGARH ] it was held that ordinary meaning of 'animals' also covers 'birds'. Therefore, in my opinion, poultry is covered under 'agriculture produce".

However there is no exemption for poultry in the mega exemption Notification No. 25/2012-ST dated 20.6.2012 as amended.

[KASTURI SETHI]

Unless the word, 'poultry' is specifically mentioned in the Negative list or list of exempted services, exemption is not available. Thus I support the views of Sh.Ranganathan, Sir. In Service Tax, specific entry is an absolutely must for the purpose of availing/claiming exemption from ST. Nobody can deny that Education Guide has no statutory force.

[Rajagopalan Ranganathan]

Dear Kasturi Sir,

Thank you for supporting my view.

[Ganeshan Kalyani]

I too agree with the experts view in as much as poultry and hatching of egg is not covered in mega exemption notification and in negative list of services. Hence the activity is taxable. Thanks.

AI Summary

Agriculture definition may include poultry, but poultry services lack explicit negative-list entry and remain taxable. Section 65B(3) defines agriculture to include rearing of animals, and an administrative note treats certain animal-breeding activities as agricultural; however, Section 66D(d) negative-list exemptions and the mega exemption notification do not expressly include poultry or egg-hatching, and administrative guidance lacks statutory force, so poultry and related hatching services are not treated as exempt and remain taxable absent specific inclusion.