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2021 (6) TMI 26 - AT - Service TaxNature of activity - Manufacture or service - Process amounting to manufacture or not - activity of crushing, pulverizing, converting and packing of spices into powder form - taxability under business auxiliary service? - coverage by decisions of co-ordinate benches of the Tribunal in M/S. JAYAKRISHNA FLOUR MILLS (P) LTD. VERSUS CCE, MADURAI [2014 (12) TMI 547 - CESTAT CHENNAI] and in SARA SPICES VERSUS COMMISSIONER OF C. EX., CUS. & S.T., COCHIN [2018 (2) TMI 1794 - CESTAT BANGALORE] - HELD THAT:- The constitutionally enshrined demarcation even among the several taxable events assigned to the Union by the Seventh Schedule for imposing of levies is mirrored, for the period preceding the introduction of ‘negative list’ regime, by the taxing of ‘contract manufacture’ as ‘business auxiliary service’ while keeping activities that are taxed by Central Excise Act, 1944 out of its ambit. The nub of the controversy, as eloquently asserted by Learned Counsel, is the ‘zero rating’ of the impugned goods owing to which the jurisdictional tax officials were afforded the luxury of contemplating the non-exigibility of the impugned activity to tax as manufacture. On perusal of the germane provisions of Central Excise Act, 1944, viz., definitions, of ‘excisable goods’ and ‘manufacture’, in section 2 in conjunction with section 3, it is clear that the authority to assign rates of duty is restricted to the ‘excisable goods’ enumerated in the tariff schedule while the levy, and assessment thereof, is conjoined with activity of ‘manufacture’ that produces those goods. The foundation of the decision in Jayakrishna Flour Mills (P) Ltd, even if not about production of powdered spice is, yet, on taxability under section 65(105)(zzb) of Finance Act, 1994, as provider of ‘business auxiliary services’ and, though in relation to processing of ‘wheat’ into ‘wheat powder’ to which the relied upon clarification of Central Board of Excise & Customs pertained, the influence therein of the test prescribed in the several judgments supra is evident. The acceptance of subsequent orders, discarding, in identical circumstances, the proposal to levy service tax, of the original and appellate authority that followed the clarification of Central Board of Excise & Customs on manufacture of wheat products, places a severe restriction on continuation of the controversy vis-à-vis levy of service tax. The decision in Jayakrishna Flour Mills (P) Ltd is, unlike the decision in Sara Spices, not deprived of its authority as binding precedent. The ‘manufacturing’ as held by the Tribunal in Jayakrishna Flour Rolling Mills (P) Ltd has relevance to the present dispute that is wanting in the decision in Sara Spices which resolved an entirely different dispute - Registry is directed to place this response of the Larger Bench before the Division Bench, along with the records, for disposal of the appeal.
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