Apeejay Tea Ltd. And Anr Vs Union of India And 3 Ors. (Gauhati High Court)
The Gauhati HC considered three writ petitions challenging demand-cum-show cause notices issued under Section 73 of the Finance Act, 1994 for service tax on transportation of tea through goods transport agencies. The petitioners contended that transportation of tea continued to be exempt under Entry 21(a) of Notification No. 25/2012-ST, as amended by Notification No. 3/2013-ST, since tea remained an “agricultural produce” in view of the SC decision in Commissioner of Sales Tax, Lucknow vs. M/s D.S. Bist and Sons. They argued that although Notification No. 6/2015-ST omitted tea from Entry 21(d), tea still qualified for exemption under Entry 21(a). The Court examined Section 65B(5) of the Finance Act, 1994, which specifically defines “agricultural produce,” and held that this statutory definition governs the interpretation of Entry 21(a). It observed that manufactured tea transported by the petitioners was not intended for the primary market contemplated under Section 65B(5) and that Notification No. 3/2013-ST had separately classified tea as “foodstuff” under Entry 21(d), indicating that tea was not intended to fall within Entry 21(a). The subsequent substitution of Entry 21(d) by Notification No. 6/2015-ST, excluding tea, therefore withdrew the exemption for transportation of tea. The Court held that the interpretation advanced by the petitioners would render the notification redundant and was not acceptable. Since it found no ambiguity in the notifications, the principle that a beneficial interpretation should be adopted for the assessee was held inapplicable. The writ petitions were dismissed, while clarifying that the respondents could proceed with the demand-cum-show cause notices strictly in accordance with law from the date of the judgment.
