https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=770134 https://www.taxtmi.com/caselaws?id=770134 Levy of service tax - Business Auxiliary Services - activities of cleaning and grading of agricultural produce carried out by the appellants - Cargo Handling Agency services - handling and transportation services related to agricultural produce provided by the appellants - cleaning, grading, handling, and transportation service - legal consultancy fees under reverse charge mechanism - extended period of limitation. Activity of cleaning and grading carried out by the appellants - HELD THAT:- It is an admitted fact that the department, based on intelligence sought information from the appellants regarding the nature of their activities. Based on the said information, the Department formed an opinion that the appellants were renting godowns/warehouse for commercial purposes and furtherance of business. In addition, the appellants were also providing handling and transportation services, cleaning and grading services to their clients. The Department also noted that the appellants were making payment for receiving legal services. In the instant case, the appellants were providing cleaning and grading services for few of the agricultural products which were warehoused by them for their clients which did not change the essential characteristics of the agricultural product stored /warehoused by the appellant. Consequently, the activity has to be considered to be in relation to the agriculture and is exempted from payment of service tax for the period upto 30.06.2012. In this context, support drawn from Hon'ble Supreme Court's judgment in M.L. Agro Products Ltd. [2018 (7) TMI 1581 - SC ORDER], wherein the Apex Court held that threshing and redrying of tobacco leaves, being an activity "in relation to agriculture" is covered under entry "production of goods on behalf of client in relation to agriculture" which is entitled for exemption under Notification No. 14/2004-S.T. - As regards the period from 01.07.2012 the negative list under section 66D clause (v) of the Act exempts the entire gamut of services related to agricultural produce - the activity of cleaning and grading carried out by the appellants stood exempted for both pre and post negative period. Handling and transportation charges - denial of benefit of the N/N. 10/2002 dated 1.08.2002 - HELD THAT:- A close reading of the said notification reveals that it exempts the taxable service provided to any person, by a Cargo Handling agency in relation to agricultural produce or goods intended to be stored in cold storage, from whole of the service tax leviable thereupon. Cargo Handling Service is defined in Circular No. B11/1/2002-TRU, dated 01-08-2002 as services of transporting coupled with loading, unloading, packing, unpacking if those are done by the authorities as that of Container Corporation of India, Airport Authority of India, Inland Container Depot, Container Freight Stations etc. Clearly, the appellant herein are not covered by the aforesaid definition - it is noted the departmental Circular no. B11/1/2002 -TRU dated 1.08.2002 which clarifies that the cargo handling services provided in relation to storage of agricultural produced are covered under storage and warehousing services and have been exempted from the levy of service tax - the handling and transport of agricultural produce was not taxable even prior 1.07.2012. This activity is also stood exempted from levy of service tax for the period 01.07.2012. Service tax on legal fees paid during the years 2012-13 to 2015-16 - HELD THAT:- As per Notification No.30/2012-ST dated 20.06.2012 legal service provided by any person as represented to any business entity the service tax is liable to be paid by the Recipient of the Service. The appellants being a business entity were liable to pay service tax on such legal consultancy charges on reverse charge basis. In view of the above, the demand on such legal fees upheld. Extended period of limitation - HELD THAT:- The extended period cannot be sustained as the department has not been able to establish any intent to evade by the appellant. Conclusion - i) Demand of service tax on cleaning and grading services is set aside. ii) Demand of service tax on handling and transportation services is set aside. iii) Demand of service tax on legal consultancy fees is upheld for the normal period. iv) Extended period demand and penalties are set aside. The appeals are allowed. Case-Laws Service Tax Mon, 05 May 2025 00:00:00 +0530