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2018 (8) TMI 1171

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..... mmissioner is not appreciable. The appellant has provided ample evidence in respect of nature of the services provided by them by way of photographs and agreement of other materials but the Revenue has not come with an evidence that the appellant was engaged in the marketing and promoting the product of their principal while providing Agricultural Extension Service - the appellant is not providing any taxable service but is providing only Agricultural Extension Service. Receipt of remuneration in terms of sale by the appellant of the product of their principal - Held that:- The appellant is getting separate commission on which they are discharging service tax liability. Therefore, on the basis of remuneration, it cannot be held that the appellant is providing service of marketing and promotion. As on merits the services rendered by the appellant are “Agricultural Extension Services” and are covered under negative list as per section 66D of the Finance Act, 1944, therefore, the appellant is not liable to pay service tax - as the issue is decided on merits, the issue of penalty is not taken up. Appeal allowed - decided in favor of appellant. - ST/60630/2018 - FINAL ORDE .....

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..... roup meetings (x) Management, commitment and participatory methodologies as a sequel to the feedback from training programmes (xi) Farmer field day on demo plot, observing the results and then conduct field day. (xii) Agriculture Extension Services, which cover all operations in relation to farmer training application of knowledge for better performance of agriculture operations. 3. An audit was conducted in the office of the appellant, it was observed by the audit team that the appellant was working a super distributor for one major pesticides/insecticides manufacturer and were engaged in marketing and promotion of pesticides/insecticide manufactured by their principal. The services undertaken by the appellant are relating to marketing and promotion of pesticides/insecticide which are taxable service under Business Auxiliary Service . Therefore, a show cause notice was issued to the appellant for the period January, 2015 to March, 2016 on 13.4.2017 by invoking the extended period of limitation to demand of service tax from the appellant. After issuance of show cause notice, the appellant paid the entire amount of service tax along with interest with a penal .....

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..... refore, the impugned order is to be set aside. 6. On the other hand, Ld. AR supported the impugned order and submitted that the appellant is receiving remuneration on the sale of the product of their principal. Therefore, the activity undertaken by the appellant can be safely concluded that the appellant is engaged in the marketing and promotion of the product of their principal and the providing taxable service to their principal. Therefore, the equivalent penalty is imposable on the appellant under Section 78 of the Finance Act, 1994. 7. Heard the parties and considered the submissions. 8. We have gone through the agreement as well as photographs. As per agreement, the appellant is required to provide following services:- Work Services: Agriculture Extension Services The Service Provider agrees to disseminate the knowledge of DuPont derived through years of scientific research in Crop protection techniques to farmers through training to facilitate better yield and productivity and in furtherance of the above objective perform all of the following functions relating to Agriculture Extension Services farmer training activities including (i) Understand .....

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..... gronomy, nutrition, water management etc. Further, the farmers are made aware of yield parameters. These trainings are conducted in the following formats: One to one format wherein Appellant interacts with farmers on one to one basis: Group format wherein Appellant interacts with a small group of 5 to 10 farmers; and Farmers meets: - Small meets wherein Appellant addresses 25 to 30 farmers; and - Large meets wherein Appellant addresses 50 to 100 farmers. Empirical training The appellant also undertakes empirical assignments wherein the theoretical knowledge is to put to application. Under this category, Appellant takes a portion of volunteering farmer s land, and competes against the farmer s traditional methods. Thereafter, the farmer can clearly perceived the benefits of following modern methods of farming over their traditional methods. Through this, the farmers in surrounding areas too learn about modern methods. The Appellant also highlights the incorrect practices adopted by volunteering farmer and suggests the farming practice best suited to the circumstances. Harvesting Days Various stages are involved in cultivation, such as sowin .....

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..... ng only Agricultural Extension Service. 11. Another ground for confirmation of demand is that the appellant is receiving remuneration in terms of sale by the appellant of the product of their principal. In fact, it is only mode of calculation of remuneration of the service provided by the appellant but the same cannot be termed that the appellant received remuneration by way of marketing and promotion or sale of the product of their principal. For that, the appellant is getting separate commission on which they are discharging service tax liability. Therefore, on the basis of remuneration, it cannot be held that the appellant is providing service of marketing and promotion. 12. We further take note of the fact that the Agricultural Extension Services are not taxable under clause of Section 66D of the negative list which is reproduced as under:- Section 66 (d) services relating to agricultural by way of: (i) Agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing. (ii) Supply of farm labour. (iii) Processes carried out at an agricultural farm including tendi .....

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