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TMI Blog2025 (5) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... e, cleaning & grading and handling were accounted for as 'warehouse rent'; 'cleaning & grading and 'handling & transportation', respectively. For the period up to 30.06.2012, the activity of 'storage & warehousing' of agricultural produce was exempted from the levy of service tax being excluded from the definition of "Storage and Warehousing" service as per clause (102) of Section 65 of the Finance Act, 1994. The appellants were of the opinion that the said two activities of agricultural produce was exempted as it was ancillary to the main service. The Department formed an opinion that as the appellant were charging separately for the three services hence the same were taxable as Cargo Handling Services and Business Auxiliary Services. Thereafter, show cause notice dated 27.12.2016 was issued for the period 01.04.2011 to 31.03.2016 demanding service tax on the said activities. The Assistant Commissioner vide order-in-original dated 14.10.2017 confirmed the demand on clearing and grading, handling and transportation charges. The impugned order upheld the said order-in-original. Hence, the present appeal. 3. Learned Counsel for the appellant submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduce as well as in respect of the goods intended to be stored in cold storage. Learned Counsel further stated that the principal activity of 'storage & warehousing' services in respect of agricultural produce have been held to be exempted. The impugned services of 'cleaning & grading' and handling & transportation' were not provided on standalone basis, but had been performed in a few instances which required such services for storage of agricultural produce. Hence, the same was classifiable along with the principal activity of storage of agriculture produce, as per Section 65A of the Finance Act, 1994 for classification of composite services consisting of a combination of different services which is liable to be classified based on the service which gives them their essential character. Learned Counsel also relied on the C.B.E.C. Letter No. 334/4/2006 dated 28.02.2006 which clarified that a composite service, even if it consists of more than one service, should be treated as a single service based on the. main or principal service and accordingly classified. 5. In the above context, learned Counsel submitted that the services of cleaning & grading' and ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviding handling and transportation services, cleaning and grading services to their clients. The Department also noted that the appellants were making payment for receiving legal services. 10. In order to appreciate the submissions of the learned Counsel and the learned Authorised Representative, it would be relevant to examine the definition of Business Auxiliary Service under section 65 (19) of the Act and taxable under section: "65 (105) (zzb) of the Act which means any service in relation to, - (i).........Or (ii).........or (iii).........or (iv).........or (v) production or processing of goods for or on behalf of the client or (vi).........or And includes services as commission agent, but doesn't include any activity that amounts to manufacture of excisable goods." 11. The Department has held that the cleaning and grading of agricultural produce is covered under production and processing of goods. In this context, we observe that the production and processing of goods for, or on behalf of, the client if provided in relation to agricultural is exempted from whole amount of tax vide Notification No. 19/2005 dated 07.06.2005 which amended the previou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest so to do, hereby directs that the following notifications of the Government of India in the Ministry of Finance (Department of Revenue) as specified in column (2) of the Table below, shall be amended or further amended, as the case may be, in the manner specified in the corresponding entry in column (3) of the said Table, namely:- Notification No Amendment 14/2004-Service Tax, dated 10th September, 2004 [G.S.R. 588 (E), dated the 10th September, 2004] In the said notification,- (i) in clause (b), for the words "production of goods on behalf of the client;", the words "production or processing of goods for, or on behalf of, the client;" shall be substituted; (ii) for the words "from the whole of the service tax", the words "and provided in relation to agriculture, printing, textile processing or education, from the whole of service tax" shall be substituted; (iii) the proviso shall be omitted. 2. This notification shall come into force on the 16th day of June, 2005. F. No. B1/6/2005-TRU" 12. It is clear that consequent to the aforesaid amendment, production or processing of goods for, or on behalf of, the client in relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the service tax leviable thereupon. Cargo Handling Service is defined in Circular No. B11/1/2002-TRU, dated 01-08-2002 as services of transporting coupled with loading, unloading, packing, unpacking if those are done by the authorities as that of Container Corporation of India, Airport Authority of India, Inland Container Depot, Container Freight Stations etc. Clearly, the appellant herein are not covered by the aforesaid definition. 18. We also take note of the departmental Circular no. B11/1/2002 -TRU dated 1.08.2002 which clarifies that the cargo handling services provided in relation to storage of agricultural produced are covered under storage and warehousing services and have been exempted from the levy of service tax. 19. In view thereof, we are of the opinion that the handling and transport of agricultural produce was not taxable even prior 1.07.2012. This activity is also stood exempted from levy of service tax for the period 01.07.2012. 20. We find support from the Tribunal decision dated 10.01.2025 in the case of Shree Ram Agro Services vs. Commissioner, CGST, Jodhpur, where on identical issues the Tribunal held that cleaning and grading, handling and transportation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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