2026-VIL-466-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Liability to pay Service Tax on job-work for manufacturing of cigarettes under the category of 'Business Auxiliary Service' - Whether the appellant is liable to pay service tax on the job-work activities performed for ITC Ltd – HELD - The appellant's job-work activities are fully exempted from service tax on two grounds. Firstly, if the job-work is considered as a manufacturing activity, it is exempt from service tax under Section 66D(f) of the Finance Act, 1994, which exempts services by way of carrying out any process amounting to manufacture or production of goods. Secondly, as per Notification No. 25/2012-ST, when the job-work is carried out on an intermediate product and the final product is cleared by the principal manufacturer (ITC) on payment of excise duty, no service tax is required to be paid by the job-worker (the appellant) - In the present case, it is clear that the manufactured cigarettes are being cleared by the principal manufacturer ITC on payment of excise duty. Therefore, service tax demand cannot be confirmed against the appellant – Further, the Department failed to bring any concrete evidence to show that the appellant had indulged in any activity amounting to suppression. Given the exemption and the negative list provisions, the appellant had a bona fide belief that no service tax was required to be paid. Accordingly, the demand for the extended period is set aside on the ground of time-barred – The impugned order is set aside and the appeal is allowed
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