The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the the activity of chilling of milk during the post negative period amounts to rendering ‘services’ as defined in section 65B (44) and is therefore, leviable to service tax.
The bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that the term ‘animal husbandry’ as per the meaning ascribed to it in the Cambridge Dictionary is, “farming of animal to produce foods such as meat, eggs and milk.” The term ‘animal husbandry’ being of wider import would include chilling of milk and therefore, the Gujarat High Court has rightly held the activity of chilling of milk to be exempted. However, there is no such provision in the Finance Act either in the negative list under section 66D(d)(iii) or under the definition of ‘agriculture’ and ‘agricultural produce’.
The appellant/assessee is engaged in Chilling of Milk for M/s. Sriganganagar Zila Dugdh Utpadak Sahakari Sangh Ltd .
The appellant is also providing the services of renting of godowns to SZDUS under the purview of taxable service namely, ‘Renting of Immovable Property Service’, defined under Section 65(19a) and taxable under Section 65 (105) (zzzz) of the Act.
The appellant was found to be liable to discharge the service tax on the gross amount received towards chilling charges (including fuel, power and electricity charges) and rent under the taxable Services BAS and renting of immovable property for the period 2012-13.
The show cause notice was issued towards the said demand along with the interest, penalty and late fee charges.
On adjudication, the demand was confirmed. The appellant filed an appeal before the Commissioner (Appeals). The appellate authority relying on the decision in the case of M/s. Sharma Ice Factory –held that the services of chilling of milk provided by the appellant up to 30.06.2012 is not leviable to service tax.
For the remaining period the demand of Rs.1,18,097 along with the interest was confirmed after allowing the benefit of of cum duty tax and benefit of immunity from the penalty under Section 80 of the Act. Aggrieved by the confirmation of service tax, w.e.f. 01.07.2012, the appellant has preferred the present appeal.
The assessee contended that the appellant is not contesting duty amount confirmed in respect of godown rent under Renting of Immovable Property. The submissions made by thethe appellant are therefore limited to the levy of service tax for the period after 30.06.2012 on services of chilling of milk. Since 01.07.2012 the structure of service tax was changed with the introduction of a negative list and therefore she relied on the provisions of Section 66D(d)(iii) to say that the activity carried out by them falls in the negative list. As per the Notification No. 11/2017 dated 28.06.2017 and also the decision of the Gujarat Co-operative Milk Marketing Federation Ltd. Therefore, the demand raised is not sustainable and needs to be set aside.
The issue raised was whether the activity of chilling of milk would fall under ‘services’ as defined under Section 65B(44) or would fall under the negative list as per Section 66D(d)(iii) as claimed by the appellant.
The tribunal has upheld the decission of the Commissioner (Appeals) by which it was that the activity of chilling of milk during the post negative period amounts to rendering ‘services’ as defined in section 65B (44) and is therefore, leviable to service tax.
Case Details
Case Title: M/s. Jai Durge Ice Factory Versus Commissioner of CGST & Central Excise, Udaipur
Case No.: Service Tax Appeal No. 52965 of 2018 [DB]
Date: 18.03.2025
Counsel For Appellant: J. Kainaat
Counsel For Respondent: Manoj Kumar
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