QUESTION

Query in Service Tax matter. 1If Client has providing exempt as well as taxable service then service tax registration consider only taxable service for registration or consider both exempt as well as taxable service turnover for registration? ? 2. My client has received notice from service tax regarding Not taken Service tax Registration for FY 2015-16 and my client is dealing in commission Service of Castle Seeds and Castle oil then my question is whether Commission income related to castle seeds or castle oil service income is liable to service tax or not? Whether Castle Seeds or castle oil is Agriculture produce or not ? If agriculture produce then commission income related to agriculture produce is exempt or taxable ?

ANSWER

Facts of the case: Client was providing exempt as well as taxable service, then service tax registration consider only taxable service or both exempt as well as taxable service turnover for registration?
Client is dealing in commission Service of Castor Seeds and Castor oil. Whether Commission income related to castor seeds or castor oil service was liable to service tax or not? Whether Castor Seeds or castor oil is Agriculture produce or not? If agriculture produce then commission income related to agriculture produce was exempt or taxable?

Law applicable:
Service Tax (Registration of Special Category of Persons) Rules, 2005-Registration

(2) Any provider of taxable service whose aggregate value of taxable service in a financial year exceeds nine lakh rupees shall make an application to the jurisdictional Superintendent of Central Excise in such form as may be specified, by notification, by the Board, for registration within a period of thirty days of exceeding the aggregate value of taxable service of nine lakh rupees.

Service Tax (Registration of Special Category of Persons) Rules, 2005-Definition

(b) 'aggregate value of taxable service' means the sum total of first consecutive payments received during a financial year towards the gross amount, as prescribed under section 67 of the Act, charged by the service provider towards taxable services but does not include payments received towards such gross amount which are exempt from the whole of service tax leviable thereon under section 66 of the Act under any notification other than Notification No. 6/2005-Service Tax, dated the 1st March, 2005 [G.S.R. 140 (E), dated the 1st March, 2005];

Finance Act (ST) 1994- Section 66- Negative List of services:
(d) services relating to agriculture by way of'
(i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing;
(ii) supply of farm labour;
(iii) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling, or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market;
(iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;
(v) loading, unloading, packing, storage or warehousing of agricultural produce;
(vi) agricultural extension services;
(vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce;


Interpretation: 1. For determining eligibility of registration under service tax, aggregate value of only taxable service was to be taken into consideration.
2. Castor seed is an agricultural produce thus commission service related to castor seed was covered under negative list hence exempt from service tax however Castor oil is not considered as agriculture produce, therefore commission service related to castor oil was taxable under service tax.

Conclusion: For calculation of Aggregate Turnover for registration under Service tax only taxable service was to be taken into consideration.
Commission service related to castor seed was exempt however Commission service related to castor oil was taxable under service tax.
Therefore for computation of aggregate turnover for determining eligibility for registration Commission related to castor oil will be added but  Commission related to castor seed will not be added (Reply dt.22.10.2020)