2025-VIL-1100-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax – Manufacture or Business Auxiliary Service, Activity of chilling of raw milk and then subjecting the milk to the process of separation, standardisation, and pasteurisation - Appellant undertook various processes such as chilling, separation, pasteurization, standardization, and packing of raw milk on behalf of principal. The Revenue authorities considered these activities as providing "Business Auxiliary Service" and accordingly issued a show cause notice demanding service tax - Whether the activities undertaken by the appellant on the raw milk, including chilling, separation, pasteurization, standardization, and packing, amount to "manufacture" or are in the nature of providing BAS – HELD - The activities undertaken by the appellant on the raw milk, including chilling, separation, pasteurization, standardization, and packing, amount to "manufacture" as per the Chapter Notes of Chapter 4 of the Central Excise Tariff Act, 1985 and, therefore, excluded from the purview of "Business Auxiliary Service" under Section 65(19) of the Finance Act, 1994 - the provisions of Section 65(19) that the “BAS” does not include any activity that amounts to manufacture of excisable goods. Since the activity of chilling, separation, pasteurization, standardization, and packing in pouches have been held to be manufacture, the same is excluded from the purview of service under the category of BAS - the impugned order is set aside and the appeals are allowed
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