Activity Of “Chilling Of Milk” Is A Service, Leviable To Service Tax: CESTAT

The Bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed 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.”

In this case, the assessee/appellant in engaged in Chilling of Milk. The assessee 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 Finance Act, 1994.

The assessee 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.

A 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 assessee filed an appeal before the Commissioner (Appeals). The assessee has challenged the order passed by the Commissioner of Customs (Appeals) before the Tribunal.

The submissions made by the assessee are limited to the levy of service tax for the period after 30.06.2012 on services of chilling of milk. It was submitted that since 01.07.2012 the structure of service tax was changed with the introduction of 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.

The issue before the bench 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 assessee.

The bench looked into Notification No. 11/2017-Central Tax (Rate), dated 28.06.2017 and observed that the distinguishing feature in the notification is the Heading 9986 which specifically speaks of 'animal husbandry'.

The bench further noted that 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 bench agreed with the Commissioner (Appeals) 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.

In view of the above, the Tribunal dismissed the appeal.

Case Title: M/s. Jai Durge Ice Factory v. Commissioner of CGST & Central Excise,

Udaipur

Case Number: Service Tax Appeal No. 52965 of 2018 [DB]

Counsel for Appellant/ Assessee: J. Kainaat

Counsel for Respondent/ Department: Manoj Kumar

Click Here To Read/Download The Order