2015 (9) TMI 1477 - AT - Service Tax

Demand alongwith interest and penalties - Clearing the so called reimbursements were on PMT basis as was the commission. In these circumstances we do not find any merit in the appeal as far as the demand of service tax and interest is concerned. However penalty under Section 76 ibid is set aside and penalty under Section 78 ibid is reduced to 25% - Decided partly in favour of appellant

Summary

Issues:
Service tax demand confirmation for Clearing & Forwarding Agents (C&FA) service.

Analysis:
The appeal was filed against the Order-in-Appeal confirming a service tax demand for C&FA service for a specific period. The appellant contended that they were providing Cargo Handling Service (CHS) and should not be liable for service tax on reimbursements of expenses. However, the terms of the C&FA contract with the service recipient clearly indicated the appellant's role as a C&FA Agent, leaving no room for doubt. The appellant registered as a C&FA service provider in 2003 but failed to pay the service tax for subsequent periods, contradicting their claim of a bona fide belief of non-liability. The judgments cited by the appellant were deemed inapplicable due to differing facts and circumstances. The terms of the C&FA contract and Rule 6(8) of the Service Tax Rules supported treating the entire remuneration as assessable value, dismissing the appeal on service tax and interest demand.

Penalty Imposition:
Penalties under Sections 76 and 78 were imposed, but legal precedents highlighted that once penalty under Section 78 was imposed, penalty under Section 76 might not be justified. The Tribunal partially allowed the appeal by setting aside the penalty under Section 76 and reducing the penalty under Section 78 to 25% of the impugned demand. The appellant was given 30 days to pay the reduced penalty, demand, and interest, with any prior payments taken into account. The judgment emphasized the option to extend reduced mandatory penalty under Section 78 even at the CESTAT level if not provided by lower authorities.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT New Delhi highlights the issues of service tax demand confirmation for C&FA service and the subsequent penalty imposition, providing a comprehensive understanding of the legal reasoning and outcomes.