TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 201
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....ts of the case are that the appellant during the relevant period alleged to have provided services relating to collection of manufactured tea from auction centre, storing, blending and repacking of tea for their clients but not discharging service tax for such activities. Alleging that the services rendered by the appellant fall under the taxable category of Clause (v) under Section 65(105zzb) of Business Auxiliary Service, show-cause notice was issued to them on 10.07.2007 for recovery of the service tax of Rs.5,53,355/- with interest and penalty for the period from November 2005 to December 2006. On adjudication, the demand was confirmed with interest and penalty. Aggrieved by the said order, they filed an appeal before the learned Commis....
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....The short question involved in the present appeal for consideration is whether the activity undertaken by the appellant fall under the taxable category of Business Auxiliary Service and exempted as an agricultural produce under Notification No.14/2004-ST dated 10.09.2004. In the show-cause notice, it is alleged that the activities undertaken by the appellant contains collection of tea, unloading, stacking, spreading, blending, filling, weighing, loading in containers. The appellant collect tea auctioned by their client from the storage godown, then loading, transporting and unloading the same at their own godown, packing the same in 100 grams, 500 grams and 1 kg. by engaging their own workers using the packing materials supplied by their cl....
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.... a commission agent, but does not include any activity that amounts to "manufacture" of excisable goods." 6. The claim of the appellant that the activities undertaken by them do not fall under the scope of Clause (v) viz., "production or processing of goods for, or on behalf, of the client". The activities carried out by the appellant are reflected in the contract dated 08.11.2005 entered with the Kerala State Civil Supplies Corporation Limited (FSCSC). Under the said Contract, the appellant was undertaking the activity of blending packing and piecework with FFS Unit. For the purpose of blending, they were paid Rs.1.48 per kg and for packing different rates depending on the weighing of the pouches and for piecework with FFS Unit Rs.0.72 ....
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.... Service'. 7. The next question needs to be addressed is whether it is exempted in view of the Notification No.9/2003-ST dated 20.06.2003 and Notification No.14/2004-ST dated 10.09.2004 being 'Agricultural Produce' during the relevant period. After blending, packing and repacking, tea remains as an agricultural produce as held by the Hon'ble Bombay High Court in the case of Nutan Warehousing Company Pvt. Ltd.'s case (supra). Their Lordships analysing the meaning of 'Agricultural Produce' observed as follows: "23. On a plain reading of the definition of the 'agricultural produce' and as applicable in the present context, it can be certainly inferred that the tea is produced from the cultivation of plants (tea gardens). It is an e....
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.... in the Schedule." In the context of such definition, the Supreme Court observed that it cannot be said that "tea leaves" produced from the tea gardens being primary agricultural produce, would cease to be agricultural produce once they got processed. The Court observed that after plucked tea leaves are processed by roasting them and then by subjecting them to further process of blending and ultimately packing them in suitable packets, they still remained all the same agricultural produce, so manufactured out of the basic agricultural raw material 'tea leaves'. The relevant observations read thus :- "145. ..... Section 2(1)(a) of the Market Act, as seen earlier, includes in the definition of agricultural produce not only t....