2012 (2) TMI 179 - AT - Service Tax

Clearing & Forwarding Agent Services - determination of assessable value including incidental and ancillary expenses connected with and integral to the taxable service provided Held that - The issue of inclusion is no more in res integra in view of decision in the case of Sri Bhagavathy Traders vs. C.C.E., Cochin (2011 -TMI - 206710 - CESTAT, BANGALORE). Further, it may not be improper to grant waiver of penalty imposed u/s 76 of Finance Act, 1994 since the determination of assessable value was in debatable stage at the inception of law. However penalty imposed u/s 77 of the said Act is confirmed Decided partly in favor of assessee.

Summary

Issues:
1. Inclusion of expenses incurred for providing C & F service in the assessable value.
2. Levy of penalty under Sections 76 and 77 of the Finance Act, 1994.

Issue 1: Inclusion of expenses in assessable value
The appellant contended that the authorities wrongly included expenses for providing C & F service in the assessable value due to a lack of clarity in the law at that time. The appellant argued that this lack of knowledge resulted in a service tax demand. The representative for the Revenue, however, argued that incidental and ancillary expenses, including go-down rent, are to be included in the assessable value of the taxable service of C & F agent service. The Revenue cited a Larger Bench decision in the case of Sri Bhagavathy Traders vs. C.C.E., Cochin to support their stance. The Tribunal, after hearing both sides and examining the records, agreed with the Revenue's representative. The Tribunal upheld the determination of assessable value, including the incidental and ancillary expenses, based on the precedent set by the Larger Bench decision.

Issue 2: Levy of penalty
Regarding the levy of penalty, the Tribunal acknowledged that the law was in a debatable stage at the time of the determination of assessable value. Considering this, the Tribunal deemed it appropriate to grant a waiver of the penalty imposed under Section 76 of the Finance Act, 1994. The Tribunal noted that since the determination of assessable value was uncertain due to the evolving legal landscape, it would not be fair to uphold the penalty in full. Consequently, the appellant was granted partial relief, with the waiver of the penalty under Section 76 ordered, while the penalty under Section 77 was confirmed.

In conclusion, the Appellate Tribunal CESTAT, New Delhi, in this judgment, addressed the issues of including expenses in the assessable value of C & F services and the levy of penalties under the Finance Act, 1994. The Tribunal upheld the inclusion of incidental and ancillary expenses in the assessable value based on a precedent set by a Larger Bench decision. Additionally, the Tribunal granted partial relief to the appellant by waiving the penalty under Section 76 of the Act but confirming the penalty under Section 77.