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2017 (2) TMI 1355
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....nan, Special Counsel, for the Department. ORDER [Order per : Justice Satish Chandra (President)]. - The issues involved in these appeals pertain to the demand of service tax on Business Auxiliary Service (BAS), Goods Transport Service (GTA service) and Renting of Immovable Property Service. Hence, all the appeals involving identical issues are disposed by this common order. 2. The issues involved in each of these appeals, the disputed tax amounts involved/confirmed/set aside in the impugned orders in each case is tabulated as under : S. No. Appeals No. Appellant Name Amount involved in BAS (Rs.) Amount involved in GTA (Rs.) Amount involved in Renting of immovable property (Rs.) 1. ST/341/ 2011 M.L. Agro Products Ltd. 8,66,65,781/- 5,23,412/- N/A 2. ST/2026/ 2012 Alliance one Industries India (P) Ltd. 3,57,50,467/- 6,25,190/- N/A 3. ST/20446/ 2014 Premier Tobacco Packers (P) Ltd. N/A 76,301/- Rs. 51,152/- 4. ST/20578/ 2014 Premier Tobacco Packers (P) Ltd. 6,67,16,981/- N/A N/A 5. ST/28327/ 2013 C.C., C.E. & S.T. -GUNTUR 19,14,667/- Set aside by OIA Rs. 55,211/- uphe....
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.... (P) Ltd. 1,93,33,493/- 10,28,569/- N/A 30. ST/23768/ 2014 Maddi Lakshmaiah & Co. Ltd. 1,21,14,056/- 37,414/- N/A 31. ST/2025/ 2012 Alliance One Industries India (P) Ltd. 1,19,19,903/- 2,20,133/- N/A 32. ST/1941/ 2012 M.L. Agro Products (P) Ltd. 1,54,01,904/- 37,808/- N/A 33. ST/1940/ 2012 Mahi Agro Products (P) Ltd. 1,87,80,431/- N/A N/A 34. ST/21015/ 2014 CCE, C. & S.T., GUNTUR 47,00,458/- Set aside by OIA N/A N/A 35. ST/2086/ 2012 Polisetty Soma-sundaram 1,00,32,862/- 1,75,350/- N/A 36. ST/2144/ 2012 DTE Exports (P) Ltd. 95,62,717/- 1,27,593/- 6,180/- 37. ST/25730/ 2013 Maddi Lakshmaiah & Co. Ltd. 8,72,19,315/- 9,22,321/- 5,68,95,322/- 38. ST/410/ 2011 Alliance One Industries India (P) Ltd. 3,62,23,558/- 26,49,904/- N/A 39. ST/26978/ 2013 Premier Tobacco Packers (P) Ltd. 57,32,393/- 2,02,907/- 1,91,821/- 40. ST/30368/ 2016 Alliance One Industries (P) Ltd. 2,05,50,911/- 9,48,151/- N/A 41. ST/27968/ 2013 Indian Tobacco Traders N/A 49,145/- N/A 42. ST/279....
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....grieved, the assessees concerned have preferred appeals as listed in the table under para-2 above. 3.3 In seven cases (Sl. Nos. 5, 9, 11, 34, 42, 46 and 47 of the table under para-2 above), the department has filed appeals against order of lower authority setting aside the demands of service tax on BAS. In one case (Sl. No. 16 of table), department is in appeal only on non-imposition of penalties by the adjudicating authority. 3.4 With this background, we heard Shri Y. Sreenivasa Reddy, Shri Ch. Venkateshwara Rao, Shri S. Sankaravadivelu and Shri G. Prahlad, learned advocates for the assessees. The submissions of these counsels can be summarised as under : (i) Department has wrongly demanded service tax liability under BAS, which was introduced w.e.f. 1-7-2006 under S. 65(19) of the Finance Act, 1994. They submit that as per Notification No. 14/2004, dated 10-9-2004, they are exempted from tax liability on BAS for the reason that their services are "in relation to agriculture". Further they submit that as per the Notification No. 19/2005-S.T., dated 7-6-2005, the words in clause (b) of Notification No. 14/2004-S.T., namely, "production of goods on beha....
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....lists the taxable services exempted from the whole of the service tax leviable under Section 66B of the Finance Act, 1994. Under Item No. 30 of the list is included : "Carrying out an intermediate production process as job work in relation to : (a) agriculture, printing or textile processing". Learned counsels submit that as the activity in question has been confirmed as one relating to agriculture, the same would perforce fall in the negative list of services fully exempted from service tax. They also highlight the clarification 4.4.6 in Education Guide issued by C.B.E. & C. after introduction of Negative List, which read as under :- 4.4.6. Would operations like shelling of paddy or cleaning of wheat carried out outside the farm be covered in the negative list entry relating to agriculture as sub-clause (iii) of clause (d) of Section 66D relating to services by way of processes carried out at an agricultural farm? The said sub-clause (iii) also includes 'such like operations which do not alter the essential characteristic of agricultural produce'. Therefore, activities like the processes carried out in agricultural farm would also be covered if the same are performed ou....
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....ed stage for retaining storage capacity before it reaches the customers. Apart from {he above, tobacco is also threshed either with stem or without stem as per the specifications of the customers. The tobacco processing also includes quality assurance control with the help of latest generation equipment to suit all international tobacco buyers' requirements, in addition to above, chemical analysis of tobacco is performed on Auto analyzer backed by manual filtrations using various chemicals. Tobacco will be packed with a fully computerised packing system. The final product is packed by a fully computerised automatic press into cartons for sale. Lastly, he also justified the demands confirmed in respect of GTA & Renting of Immovable Property services. 5.1 We heard both parties at length and perused the records. 5.2 It is seen that as per Notification No. 14/2004-S.T., BAS in respect of inter alia, "production of goods on behalf of client", inter alia "in relation to agriculture" is exempted from service tax liability. This exemption got further broadbanded vide Notification No. 19/2005, dated 7-6-2005 as a result of which such BAS in respect of "production of processi....
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....ecifications. Here the product form will not change. Only the shape of the leaf will change. There are no chemical changes involved. The product will stabilize after threshing and the shelf life of tobacco will increase. In the absence of these processes the object of Virginia tobacco cultivation will remain incomplete and gets defeated. After threshing also the tobacco is still called as unmanufactured tobacco only. Therefore the entire threshing operation can be technically called Post Harvest operations of Virginia Tobacco cultivation for quality control and pre-shipment inspection. 5.4 In view of the above, we are of the view that the activity of the assessees is in relation to the agriculture and not subject to service tax as a Business Auxiliary Service even before or after the negative list was issued on 1-7-2012. Hence, we find no merits in the impugned orders where the said activity of threshing and redrying was brought under BAS. On this issue, the concerned assessee-appellants will get the relief. By implication, Department's appeals against the relevant impugned orders which have set aside demands made by original authorities on BAS will require to be dismissed.....
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....re paying the freight charges. When it is so, then we are of the view that the Department has rightly applied GTA and demanded the service tax for the reason that without an accompanying paper/document, goods cannot be received without which is the basis of amount for payment. This is also the view taken by the Tribunal in U.P. State Sugar Corporation v. CCE, Meerut-II [2011 (24) S.T.R. 423 (Tri.-Del.), it would be worthy of reproducing relevant portion of the Tribunal's finding herein below : "4. Ld. DR; on the other hand, supports the order of the authorities below. When we find that the first Appellate Authority appears to have rightly understood the matter in controversy, there is no quarrel on the consignment note to give any interim relief to the appellant. Consignment note may not necessarily be in any format since no such format is prescribed under law but the documents accompanying the goods identifying the consignor and consignee, route of consignment enable to construe what a consignment note is and the appellant's grievance that the consignment note was mandatory does not find support of law when fact and circumstances demonstrate route of goods moved disc....
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....rse charge mechanism in terms of Rule 2(1)(d)(iv) of the Service Tax Rules. When this is so, this demand is upheld and appeal on the issue is dismissed. 9.1 In a few cases, the learned counsel submits that the service tax was already paid along with interest so no question of imposing of penalty has arisen. 9.2 It may be mentioned that in the case of Sethi Tools Pvt. Ltd. v. CCE, CC & ST, Vadodara-II [2015 (40) S.T.R. 230 (Tri.-Ahmd.)], the Ahmedabad Tribunal has observed that if the service tax is paid within the period of 6 months, then penalty was not leviable under Section 80(2) of the Finance Act, 1994 which was introduced by the Budget of 2012. In this background, we remand all these cases for de novo consideration only on the issue of penalties on tax demands in respect of GTA and Renting of Immovable Property and commission paid to foreign agents, whether at all leviable in the facts and circumstances of each of these cases, and if imposable, the quantum thereof in accordance with law. Needless to say, the respective authorities in de novo will afford reasonable opportunity to the appellants to put forth their case. Additional evidences may also be admitted ....