By TIOL News Service

NEW DELHI, NOV 10, 2017: THE appellants are engaged in providing various services to M/s Kriti Industries Ltd. and M/s Laxmi Solvex Dewas, in connection with manufacturing activity of these two clients.

The activities mainly relate to loading, unloading of receipts of soyabean seed and other materials, stacking loading into the feeding points, filling, weighment, stitching, staking, de-oiled cake, loading the cake in truck etc. For these services, the appellants get paid on monthly basis @ Rs. 34.50 / MT.

Revenue entertained a view that these activities are taxable under the category of Business Auxiliary Service.

The original authority confirmed service tax liability of Rs.5,88,665/- and also imposed penalties.

Aggrieved by the order passed by Commissioner (Appeals), the appellant is before the CESTAT.

It is submitted that the SCN did not make a specific allegation as to under what category of Business Auxiliary Service, the appellants are liable to pay service tax.

Furthermore, whereas the original authority confirmed the demand holding that the activities carried out are incidental or ancillary to the production and manufacture of goods by the clients, the Commissioner(A) held that the appellants were helping in procurement of goods for the clients and as such covered under Business Auxiliary Services.

Inasmuch as there is no clarity or specific proposal for the tax liability and, therefore, the demand cannot sustain.

The AR supported the demand.

After considering the submissions made by both sides, the CESTAT observed -

"7. On perusal of the show cause notice, the original order and the impugned order, we note that the Revenue could not make up their mind as to which category of BAS will apply to the activities of the appellants. Admittedly, the appellants carried out a whole range of activities loading, unloading of raw materials and up to loading de oiled cake for despatch. In between they have attended to various take of type of work in the clients manufacturing premises. It is necessary to identify such activities for a tax liability under BAS. Admittedly, neither show cause notice nor the lower authorities could arrive at definitive conclusion in this regard. We note on this ground alone the proceedings against the appellant will fail. The notice proposed demand without specifying category of tax, original order confirmed tax liability under clause (vii) of Section 65(19), whereas first appellate authority held the liability under clause (iv) (procurement of goods or services, which are inputs for client). The appellant did not procure any goods for any client. We have not examined further merits of the case as the proposal itself was vague and the lower authorities further confounded the issue by proceeding on analysis on a different categories."

The impugned order was set aside and the appeal was allowed.

(See 2017-TIOL-3957-CESTAT-DEL)