Horticulture Services Exempt from Service Tax: CESTAT Confirms Only ₹12,870 Shortfall on Manpower Supply Services [Read Order]
The demand of Service Tax on turnover of Rs. 40,16,924/- relating to horticulture services, is set aside on merits and on account of the time bar.
![Horticulture Services Exempt from Service Tax: CESTAT Confirms Only ₹12,870 Shortfall on Manpower Supply Services [Read Order]](https://images.taxscan.in/h-upload/2026/03/05/2127929-horticulturejpg.webp "Horticulture Services Exempt from Service Tax: CESTAT Confirms Only ₹12,870 Shortfall on Manpower Supply Services [Read Order]")
In a recent ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that horticulture services, such as garden upkeep, watering, fertilization, and spraying of insecticides, are exempt from service tax and confirmed only a minor shortfall of ₹12,870 relating to manpower supply services, payable with interest but without penalty. This appeal was filed because...
In a recent ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that horticulture services, such as garden upkeep, watering, fertilization, and spraying of insecticides, are exempt from service tax and confirmed only a minor shortfall of ₹12,870 relating to manpower supply services, payable with interest but without penalty.
This appeal was filed because the demand for Service Tax amounting to Rs. 6,65,529/- was confirmed against the appellant based on alleged differences between Form 26AS and ST-3 returns for the financial year 2014-2015, leading to a show cause notice dated March 11, 2020.
The appellant, Prasad Engineering, argued that they were engaged in providing horticulture services such as upkeep of gardens by watering, sweeping, fertilization, spraying of insecticides, etc., which are exempt from payment of Service Tax.
They also submitted that out of the total turnover of Rs. 57,01,589 considered in the SCN to issue the demand, the turnover of Rs. 40,16,924/- pertains to horticulture services and was therefore not taxable, and those activities they were providing, it was contended, were squarely covered under the exemption for agricultural services
Reliance was placed on the Tribunal’s earlier decision in CCE & ST Ahmedabad‑III v. Murlidhar Horticulture Pvt. Ltd.
For the balance turnover of ₹16.84 lakh relating to manpower supply services, the appellant submitted that service tax was payable only on 25% of the gross amount. After partial payment of ₹31,186, only ₹12,870 remained disputed, which they contested on limitation grounds.
On the other hand, the Revenue countered that the appellant had not furnished sufficient evidence to prove that the services were purely horticultural. It also argued that the appellant failed to discharge full liability under manpower supply services, justifying the invocation of the extended period.
On examining sample invoices, the Tribunal noted that the appellant was engaged in horticulture activities such as garden maintenance, watering, and allied services. Referring to the Ahmedabad Bench’s ruling, in CCE & ST Ahmedabad-III v. Murlidhar Horticulture Pvt. Ltd. 2019, the tribunal held that no Service Tax is payable on the turnover of Rs. 40,16,924.
The bench R. Muralidhar (judicial member) noted that for manpower supply services with a turnover of ₹16,84,665, the appellant had partly paid tax, but a shortfall of ₹12,870 remained, and this amount, along with applicable interest, was held payable, though no penalty was warranted since there was no evidence of suppression or intent to evade.
Accordingly all penalties imposed earlier were set aside, and the appellant was granted consequential relief of pre-deposit after adjusting the payable ₹12,870 plus interest, and the appeal was disposed of.
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