Custom, Excise & Service Tax Tribunal
Topline Services vs The Principal Commissioner Of Central ... on 4 March, 2026
ST/20148/2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 20148 of 2014
(Arising out of Order-in-Appeal No.287/2013-ST dated 19.11.2013
passed by the Commissioner of Central Excise, Customs and Service
Tax (Appeals), Cochin.)
M/s. Topline Services
Cochin Port Trust, Appellant(s)
Extension CWC Godown,
G.V. Iyer Road, Willingdon Island,
Cochin - 3.
VERSUS
The Commissioner of Central Excise,
Customs and Service Tax (Appeals)
C.R. Building, I. S. Press Road, Respondent(s)
Cochin - 18.
APPEARANCE:
Ms. Rukmani Menon Advocate for the Appellant. Shri M. A. Jithendra, Asst. Commissioner (AR) for the Respondent.
CORAM: HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE MRS. R. BHAGYA DEVI, MEMBER (TECHNICAL) FINAL ORDER NO. 20248 / 2026 DATE OF HEARING: 08.09.2025 DATE OF DECISION: 04.03.2026 PER: D.M. MISRA This is an appeal filed against Order-in-Appeal No.287/2013-ST dated 19.11.2023 passed by the Commissioner of Central Excise, Customs and Service Tax (Appeals), Cochin.Page 1 of 7
ST/20148/2014
2. Briefly stated the facts of the case are that the appellant during the relevant period alleged to have provided services relating to collection of manufactured tea from auction centre, storing, blending and repacking of tea for their clients but not discharging service tax for such activities. Alleging that the services rendered by the appellant fall under the taxable category of Clause (v) under Section 65(105zzb) of Business Auxiliary Service, show-cause notice was issued to them on 10.07.2007 for recovery of the service tax of Rs.5,53,355/- with interest and penalty for the period from November 2005 to December 2006. On adjudication, the demand was confirmed with interest and penalty. Aggrieved by the said order, they filed an appeal before the learned Commissioner (A), who in turn rejected their appeal. Hence, the present appeal.
3. At the outset, the learned advocate for the appellant has submitted that they were only into packing of tea and not rendering any services which would fall under the category of production or processing of goods as mentioned under Business Auxiliary Service. They were not subjecting the tea procured from their clients for processing, leave alone production of goods. The activity undertaken by the appellant is only packing of ready to use tea and not in production or processing of tea before completion of manufacturing activity, therefore, the allegation of the department that it falls under the Business Auxiliary Service is wholly incorrect. Further, she has submitted that the product dealt with the appellant i.e., tea is a "agricultural produce", hence, exempted vide Notification No.14/2004-ST dated 10.9.2004 from payment of service tax. The said Notification was amended subsequently also allows exemption to "agricultural and other categories". In support she has referred to the judgment of the Tribunal in the case of CCE vs. Parkson Estates & Industries: 2011 (23) STR 77 (Tri.-
Page 2 of 7ST/20148/2014 Bang.) and also the judgment of the Hon'ble Bombay High Court in the case of Nutan Warehousing Company Pvt. Ltd. vs. CCT, Pune: 2024 (80) GSTL 227 (Bom.).
4. The learned Authorised Representative (AR) for the Revenue reiterated the findings of the learned Commissioner (A).
5. Heard both sides and perused the records. The short question involved in the present appeal for consideration is whether the activity undertaken by the appellant fall under the taxable category of Business Auxiliary Service and exempted as an agricultural produce under Notification No.14/2004-ST dated 10.09.2004. In the show-cause notice, it is alleged that the activities undertaken by the appellant contains collection of tea, unloading, stacking, spreading, blending, filling, weighing, loading in containers. The appellant collect tea auctioned by their client from the storage godown, then loading, transporting and unloading the same at their own godown, packing the same in 100 grams, 500 grams and 1 kg. by engaging their own workers using the packing materials supplied by their clients, repacking of containers in large boxes, stacking, dispatching of the packed tea or stacking and loading the same in vehicles brought by the clients. The appellant in their submission claim that the activity undertaken by them cannot fall under the scope of Clause (v) of the definition of Business Auxiliary Service under Section 65(105zzb) i.e., "production or processing of goods for, or on behalf of, the client". At the relevant point of time, 'Business Auxiliary Services' as was in force reads as follows:
"Section 65(19)(v) of the Finance Act, 1994 - "Business Auxiliary Service"
means any service in relation to:
(i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or Page 3 of 7 ST/20148/2014
(ii) promotion or marketing of service provided by the client; or
(iii) any customer care service provided on behalf of the client; or
(iv) procurement of goods or services, which are inputs for the client; or
(v) Production or processing of goods for, or on behalf of, the client.
(vi) Provision of service on behalf of the client; or
(vii) A service incidental or auxiliary to any activity specified in sub-
clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to "manufacture" of excisable goods."
6. The claim of the appellant that the activities undertaken by them do not fall under the scope of Clause (v) viz., "production or processing of goods for, or on behalf, of the client". The activities carried out by the appellant are reflected in the contract dated 08.11.2005 entered with the Kerala State Civil Supplies Corporation Limited (FSCSC). Under the said Contract, the appellant was undertaking the activity of blending packing and piecework with FFS Unit. For the purpose of blending, they were paid Rs.1.48 per kg and for packing different rates depending on the weighing of the pouches and for piecework with FFS Unit Rs.0.72 per kg. The duties and responsibilities of the contractor stipulated under the said contract indicate that the appellant was required to collect and transport of tea brought in auction from different warehouses to the specified godowns of the appellant approved by the corporation, unloading and stacking the same inside their godown grade-wise so as to make it easy for blending. Under the process of blending, they were required to open the bags, removing foreign materials and damaged substances and with the direction of the supervisor Page 4 of 7 ST/20148/2014 present fill tea bags of 25/30 kg printed. Thereafter, weighing and tying the inner threads and stitching filled bags, pasting the tag showing the weight, etc., and then stacking in lots. Similarly, packing of pouches also involve processes of opening of bags, filling tea into pouches, sealing the pouches properly, making it leakproof, thereafter, accounting and filling in cartons depending on the category of 100 grams, 200 grams, 500 grams and 1 kg. Piecework with FFS machine involve filling tea into the form fill and seal machine and cutting and packing of the strips of tea packets formed through the machine into cartons and sealing cartons, weighing 20 kg./ 25 kg. net at the Corporation packing unit at Kochi. All these activities carried out by the appellant is in relation to processing/packing of tea on behalf of the client which does not amount to manufacture. Therefore, these activities squarely fall under the category of 'Business Auxiliary Service'.
7. The next question needs to be addressed is whether it is exempted in view of the Notification No.9/2003-ST dated 20.06.2003 and Notification No.14/2004-ST dated 10.09.2004 being 'Agricultural Produce' during the relevant period. After blending, packing and repacking, tea remains as an agricultural produce as held by the Hon'ble Bombay High Court in the case of Nutan Warehousing Company Pvt. Ltd.'s case (supra). Their Lordships analysing the meaning of 'Agricultural Produce' observed as follows:
"23. On a plain reading of the definition of the 'agricultural produce' and as applicable in the present context, it can be certainly inferred that the tea is produced from the cultivation of plants (tea gardens). It is an edible produce meant for human consumption. It can also be said that tea without processing, which can be done either by the cultivator/producer, or otherwise cannot be consumed. Further such processes do not alter its essential characteristic of tea ceasing to be an Page 5 of 7 ST/20148/2014 agricultural produce. Also such processing is necessary for making tea marketable for primary market. Merely by blending i.e. mixing or combining different teas and/or packing, such processes would not change the basic character of tea as an 'agricultural produce'. Again by undertaking packing, it cannot be countenanced that the essential characteristic of tea to be an agricultural produce would undergo any change. It is ill-conceivable that the packs of tea cannot be sold in marketable lots, acceptable packages for its marketing.
24. ...
25. In the case of Belsund Sugar Co. Ltd. v. State of Bihar & Ors. [AIR 1999 Supreme Court 3125], the Constitution Bench of the Supreme Court inter alia examined the provisions of Section 2(1)(a) of the Bihar Agricultural Produce Markets Act, defining the word "agricultural produce". The said provision as considered by the Supreme Court reads thus :-
"Section 2(1)(a) of the Act defines 'agricultural produce' as under: 'Agricultural produce' means all produce whether processed or non-processed, manufactured or not, of Agriculture, Horticulture, Plantation, Animal Husbandry, Forest, Sericulture, Pisciculture, and includes livestock or poultry as specified in the Schedule."
In the context of such definition, the Supreme Court observed that it cannot be said that "tea leaves" produced from the tea gardens being primary agricultural produce, would cease to be agricultural produce once they got processed. The Court observed that after plucked tea leaves are processed by roasting them and then by subjecting them to further process of blending and ultimately packing them in suitable packets, they still remained all the same agricultural produce, so manufactured out of the basic agricultural raw material 'tea leaves'. The relevant observations read thus :-
"145. ..... Section 2(1)(a) of the Market Act, as seen earlier, includes in the definition of agricultural produce not only the primary produce grown in the field but also covers all processed or non-processed, manufactured or non-manufactured agricultural produce as specified in the Schedule. In the light of the aforesaid wide sweep of this definition, it cannot be said that Page 6 of 7 ST/20148/2014 tea leaves which are produced in tea gardens being primary agricultural produce would cease to be agricultural produce once they got processed. After plucked tea leaves are processed by roasting them and then by subjecting them to further process of blending and ultimately packing them in suitable packets they still remain all the same agricultural produce so manufactured out of the basic agricultural raw material "tea leaves".........."
26. In our opinion, the law laid down by the Supreme Court in D.S. Bist and Sons (supra) and Belsund Sugar Co. Ltd. (supra) is clearly applicable in the facts of the present case, which ought to have persuaded the AAR to hold that the tea belonging to Unilever as stored in the petitioner's godown, did not change its essential characteristics merely because certain processes were undertaken, so as to reach to a conclusion that tea was an agricultural produce. In reaching the above conclusion as to what was understood by the term 'agricultural produce' in some enactments and how they were considered by the Court can be discussed.
8. In view of the above, the activities carried out by the appellant relates to 'Agricultural Produce', hence, definitely falls withing the scope of the Notification No.14/2004-ST dated 10.09.2004 which though specifically raised by the appellants before the authorities below, have not been addressed. In the result, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.
(Order pronounced in Open Court on 04.03.2026.) (D.M. MISRA) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL) rv Page 7 of 7