2006 (8) TMI 633 - AT - Service Tax

Summary

Issues:
1. Liability of service tax on storage and warehousing services.
2. Applicability of penalties under Section 77 of the Act.
3. Interpretation of charges collected as demurrage or storage charges.
4. Pre-deposit requirement and waiver of balance amount.

Analysis:

1. The main issue in this case was the liability of service tax on storage and warehousing services provided by the appellant. The appellant was required to pre-deposit a specific amount for service tax and penalties under Section 77 of the Act. The Commissioner concluded that the appellant fell under the category of "Storage and Warehousing Service" as per the Finance Act, 1994, and had not paid the required service tax. The appellant argued that they were only charging demurrage and not storage charges, but the Commissioner disagreed, emphasizing that the charges collected were indeed for storage services, making them liable for service tax.

2. The second issue revolved around the applicability of penalties under Section 77 of the Act. The Commissioner found that the appellant had not registered themselves, failed to pay service tax, and had not received service tax from their clients. Despite the appellant's argument that they were only charging demurrage as per the agreement, the Commissioner, supported by the findings, maintained that the charges collected were for storage services and thus subject to service tax penalties.

3. The interpretation of charges collected as demurrage or storage charges was a crucial aspect of the case. The appellant vehemently contended that they were only collecting demurrage charges and not storage charges, as per the agreement terms. However, the Commissioner, supported by evidence, concluded that the appellant had not provided any proof that the charges were for demurrage and instead determined them to be storage charges, thereby justifying the imposition of service tax.

4. Lastly, the judgment addressed the pre-deposit requirement and waiver of the balance amount. The Tribunal, after considering both sides' submissions, directed the appellant to pre-deposit a specific amount within a stipulated period. Failure to comply with this order would result in the dismissal of the appeal. The pre-deposit amount was set to waive the balance of the service tax and penalties, with recovery stayed until the appeal's disposal, ensuring compliance with the terms outlined in the judgment.