‘Veterinary Services’ and ‘Technical and Laboratory Testing Services’ not taxable under Business Auxiliary Services [Read Order]
Veterinary Services – Technical and Laboratory Testing Services – Business Auxiliary Services – TAXSCAN
Veterinary Services – Technical and Laboratory Testing Services – Business Auxiliary Services – TAXSCAN
The Bombay High Court observed that ‘Veterinary Services’ and ‘Technical and Laboratory Testing Services’ not taxable under Business Auxiliary Services.
The Excise Department directed Appellant, Venkateshwara Hatcheries Private Limited, to pay service tax on commission received for testing and veterinary services, under the taxing entry of ‘Business auxiliary services” rendered since 1 July, 2003, on the basis that the said activities/services are covered by customer care services provided on behalf of the client. Accordingly, the Central Excise Department issued a Show Cause Notice, demanding Service Tax of Rs.89,38,978/- along with interest and penalty, from the Appellant.
The Appellant carries out various laboratory analysis and tests in respect of the chicks and the services provided by them are in relation to the brooding, growing and laying of birds which includes routine diagnostic services, specialized laboratory examinations, analysis of feed and feed ingredients and water related tests.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), disposed of the appeal by confirming the demand in respect of services provided to customers of Venco. Penalty imposed under Section 78 was upheld and no penalty was imposed under Section 76.
The primary contention as raised by the Appellant is to the effect that the Order-in-Original to the extent it confirms the Service Tax demand on the Appellant limited to the quantum of services provided to customers of Venco, under the taxable category of business auxiliary services along with interest is illegal, without any basis, without jurisdiction and bad in law.
Jitendra Motwani, counsel for the Appellant submitted that prior to 9 July, 2004, the services of commission agent were exempted from service tax and the Appellant was not paying any service tax however from 9 July, 2004 the Appellant has been paying Service Tax regularly under the category “Business Auxiliary Services”. The fact that the Appellant took registration and started paying tax with effect from 9 July, 2004 clearly demonstrates that it had no intention to evade tax.
On the other hand, Ram Ochani with Karan Adik, Advocates for the Respondent submitted that Appellant has wrongly claimed exemption under Notification No.13/2003 for the period from July 2003 to September 2004 in relation to Veterinary Services and Testing and Analysis Services.
A Division Bench comprising Justices Rajesh S Patil and GS Kulkarni observed that “Services of testing and analysis in relation to animals are clearly excluded from the technical testing and analysis service as defined under Section 65(106) of the Finance Act, and therefore there will be no liability for payment of Service tax on them.”
“At relevant time the services in the nature of ‘Veterinary Services’ and ‘Technical and Laboratory Testing Services’ did not fall under taxable category of Business Auxiliary Services” the Bench concluded.
To Read the full text of the Order CLICK HERE
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