2026-VIL-490-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Statutory levy by Statutory Authority, Consideration for service - Appellant, a statutory authority, collects auction fee @ 2% as prescribed under the Statutory Regulations for facilitating tobacco auction, grading, classification and marketing under the Tobacco Board Act 1975 - Whether the auction fee collected by the Tobacco Board constitutes consideration for taxable service - HELD – The auction fee collected by the Tobacco Board is a statutory levy prescribed under the Act and not consideration for any service rendered. The activities performed pursuant to statutory mandate do not constitute taxable service. The Tobacco Board performs regulatory functions under the statute and the fee collected is a statutory levy. Hence, the auction fee cannot be treated as consideration for taxable service – The impugned order is set aside and the appeal is allowed - Storage of agricultural produce - Whether storage of un-manufactured tobacco attracts service tax under the category of storage and warehousing service - HELD - As per Section 65(102) of the Finance Act, "storage and warehousing" excludes any service provided for storage of agricultural produce. The term 'agricultural produce' includes un-manufactured tobacco as per the CBEC Circular No. 1/2002-ST dated 01.08.2002. Therefore, the storage of un-manufactured tobacco is outside the scope of taxable service - The storage of un-manufactured tobacco is not liable to service tax - Demurrage charges – Appellant collected demurrage charges for delay in lifting of tobacco stocks stored in the godown - Whether demurrage charges collected by the Tobacco Board are liable to service tax - HELD - The demurrage charges are in the nature of penalty charges for delaying in lifting goods, and such penal charges cannot be treated as consideration for any service - The demurrage charges collected by the Tobacco Board are not liable to service tax.
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