Custom, Excise & Service Tax Tribunal
Zila Sahakari Kendariya Bank Maryadit vs Commissioner Of Cgst-Raipur on 16 April, 2026
1
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. III
E-Hearing
Service Tax Appeal No.50094 OF 2020
[Arising out of Order-in-Appeal No.BHO-EXCUS-002-APP-053-19-20
dated 27.06.2019 passed by the Commissioner (Appeals), CGST,
Central Excise and Customs, Raipur]
M/s. Zila Sahakari Kendriya Bank Maryadit,
G.E. Road, Opposite District Hospital,
....APPELLANT
Distt.-Durg (Chattisgarh).
Versus
Commissioner of Central Goods &
Service Tax and Central Excise,
Central Excise Building,
.....RESPONDENT
Dhamtari Road, Tikrapara, Raipur, Chhattisgarh-492 001.
Appearance:
Present for the Appellant : Shri K. Vaish, Chartered Accountant Present for the Respondent: Shri Mahboob Ur Rehman, Authorised Representative.
CORAM:
HON'BLE MS. BINU TAMTA, MEMBER (JUDICIAL) HON'BLE MR. P.V. SUBBA RAO, MEMBER ( TECHNICAL ) Final Order No. 50750/2026 Date of Hearing/Decision:16.04.2026 BINU TAMTA:
1. The appellant is a Cooperative Society and is also a Banking Company under Banking Regulation Act, 1949. Apart from General Banking activities, the appellant implements all the policies of the State Government. The State Government of Chattisgarh issues Paddy Procurement Policy every year, whereby the State Marketing Federation is nominated as Paddy Procuring Agency. It procures paddy from the 2 member of Prime Agricultural Society (PACS) and a Large Area Multi-
Purpose Society (LAMPS). Appellant arranges to provide these societies for distribution of support price of paddy received from MARKFED through their rural banking network. Appellant incurs various expenses like vehicle expenses, security guard charges, travelling expenses, stationery expenses contingent expenses etc. It also incurs expenses in arranging godown. Para 15 of the policy provides for payment of commission/incidental expenses to the societies. As per para 15.2.2 of the policy, appellants are granted 0.4% of the support price towards reimbursement of expenses.
2. Show cause notice dated 09.10.2012 was issued to the appellant demanding Service Tax of Rs.13.25 lakhs under „Banking and other Financial Services‟ in terms of Section 65(12) and Section 65(105) and (zm) of the Finance Act, 1994. On adjudication vide Order dated 07.12.2018, the demand was dropped as the amount received by the appellant from Markfed is reimbursement of expenses while implementing the policy of Chattisgarh Government. On appeal by the Department, the impugned order confirming the demand has been passed.
3. Shri Kapil Vaish, learned Counsel for the appellant submitted that the issue raised in the present appeal relates to leviability of Service Tax on the amount received from State Marketing Federation towards commission/reimbursement for the assistance provided in procurement of paddy has been decided in their own case vide Final Order No.51487- 51488/2019 dated January 10, 2019 in the following terms:- 3
"8. Thus, we find that the issue involved is one of interpretation. Secondly, we find that the service provided by the appellant Cooperative Bank to Markfed, which is the Sate Marketing Federation, is in the nature of Business Auxiliary Services provided by a Commission Agent in relation to sale or purchase of agricultural produce, which is exempt from service tax under the Notification No.13/2003-ST read with Notification No.8/2004-ST."
4. The aforesaid case pertains to the period April, 2006 to March, 2011 whereas the show cause notice in the present case is for the subsequent period from April, 2011 to December 2011. We fully agree with the earlier final order in the case of the appellant that the amount received from Markfed is exempted from service tax in terms of Notification No.30/2003-ST read with Notification No.8/2004-ST, wherein exemption is granted for "Business Auxiliary Services" provided to a Commission Agent in relation to sale or purchase of agricultural produce from service tax. The relevant provisions of the Notification No.13/2003- ST & 8/2004-ST are quoted below:-
"Notification: 13/2003-S.T. dated 20-Jun-2003 Business auxiliary services provided by commission agents - Exempted In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the business auxiliary services provided by a commission agent from the service tax leviable thereon under sub-section (2) of section 66 of the said Act.
Explanation.- For the purposes of this notification, "commission agent" means a person who causes sale or purchase of goods, on behalf of another person for a consideration which is based on the quantum of such sale or purchase.
2. This notification shall come into force on the 1st day of July, 2003. [Notification No. 13/2003-S.T., dated 20- 6-2003].4
Notificaiton :8/2004-ST dated 09 July, 2004.
Service tax-Effective rates of duty for Mandap Keeper, service provided by Hotels, Business auxiliary service provided by Commission agents and Tour operators- Amendment to Notification Nos.12/2021/ST, 13/2003-ST and 2/2004-ST.
SNo. Notification No. and Amendments date
1. ............... ...............
2. 13/2003-Service Tax, dated In the said notification,-
the 20th June, 2003 [G.S.R. 504 (E) dated the 20th June, (i) in the preamble, for the 2003] words "commission agent from the service tax leviable thereon under sub-section (2) of section 66 of the said Act", the words "commission agent in relation to sale or purchase of agricultural produce from the service tax leviable thereon under section 66 of the said Act" shall be substituted;
(ii) for the Explanation, the following shall be substituted, namely :-
"Explanation. For the purposes of this notification, -
(i) "commission agent" means a person who causes sale or purchase of goods, on behalf of another person for a consideration which is based on the quantum of such sale or purchase.
(ii) "agricultural produce" means any produce resulting from cultivation or plantation, on which either no further processing is done or such processing is done by the cultivator like tending, pruning, cutting, harvesting. drying which does not alter its essential characteristics but makes it only marketable and includes all cereals, pulses, fruits, nuts and vegetables, spices, copra, sugar cane, jaggery, raw vegetable fibres such as cotton, flax, jute, indigo, unmanufactured tobacco, betel leaves, tendu leaves, rice, coffee and tea but does not include manufactured products such as sugar, edible oils, processed food and processed tobacco."5
5. Following the earlier decision in the case of the appellant, we set aside the impugned order. The appeal is, accordingly allowed.
[Operative portion of the order already pronounced in open court] ( BINU TAMTA) MEMBER (JUDICIAL) (P.V. SUBBA RAO) MEMBER (TECHNICAL) Ckp.