Jai Durge Ice Factory Vs CCE & ST (CESTAT Delhi)
Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Delhi Bench, has set aside an Order-in-Appeal that sought to levy service tax on Jai Durge Ice Factory for its milk chilling activities. The Tribunal ruled that chilling milk to preserve it for transportation does not fall under the purview of “Business Auxiliary Service” as defined in the Finance Act, 1994.
Jai Durge Ice Factory, operating as a chilling plant contractor, receives milk from dairies, chills it to appropriate temperatures to prevent spoilage, and then returns the chilled milk for further processing. The Department contended that this activity amounted to a “process” liable for Service Tax under “Business Auxiliary Service.” Both lower authorities had upheld this view.
However, the CESTAT, after hearing arguments from both sides, found that the issue had previously been decided in favor of similar assessees. The Tribunal relied on its earlier decisions, notably Krishna Ice Factory and Agrasen Ice Factory (Final Order No. 52346-52347/2018 dated June 15, 2018) and Vinayak Industries.
In the Vinayak Industries case, the Tribunal observed that “mere chilling of milk to temperature below 5° Celsius for the purpose of its long-distance transportation, does not amount to production or processing of goods.” It highlighted that chilling causes “no permanent or temporary change in milk other than lowering of the temperature.”
