2025-VIL-1889-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax - Agricultural Produce - The appellant paid commission to their foreign agents for sale of their black tea. The department contended that the commission paid attracts service tax - Whether 'black tea' is an 'agricultural produce' and the services provided by the Commission Agent would be covered under the Negative List in terms of Sec.65B(5) and 66D(vii) of the Finance Act, 1994 – HELD - The processes involved in converting "green tea" into "black tea" does not alter the basic character of the tea as such and the same could not be considered as a non-agricultural product. Further, as per the CBEC Circular, client processing in which the essential characteristics of the agriculture produce is retained should be considered as covered by the expression 'in relation to agriculture'. Once the black tea is found to be agricultural produce, services provided by a commission agent for sale or purchase of agricultural produce is covered by the negative list as per Section 66D of the Finance Act, 1994 and is not exigible to Service Tax – Since the black tea is held to be an agricultural produce and the services provided by the commission agent are covered under the negative list, the issue of interest and penalties becomes redundant. Accordingly, the impugned order is set aside and the appeal is allowed - Export Commission - The appellant paid export commission to foreign commission agents for export of "black tea". The department contended that the export commission is liable for service tax under Reverse Charge Mechanism - Whether the export commission paid to foreign commission agent for export of "black tea' is liable for service tax under RCM – HELD - Since the black tea is held to be an agricultural produce and the services provided by the commission agent are covered under the negative list, the issue of export commission being liable for service tax under Reverse Charge Mechanism becomes redundant.
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