2012 (7) TMI 602 - AT - Service Tax

Clearing & forwarding agent s services - assessee s contention that review order passed by the Commissioner is time barred confirming the service tax demand including the amount already confirmed and paid by the appellant - Held that - Review power under Section 84 should be exercised correctly and properly within the prescribed limitation period prescribed which starts from the date on which the order sought to be reviewed was passed - since the Assistant Commissioner s order has been passed on 15/12/04, in view of the provisions of Section 84(5), the review order should have issued within a period of 2 years i.e. by 14/12/06, while in this case the order was signed on the note sheet of the review file on 8/12/06,the fair copy of the order for issue/distatch was signed only on 29/12/06 - though the endorsement regarding dispatch signed by the Superintendent (review) and enclosed with the order bears the date 8/12/06 below the signatures of the Superintendent, forwarding of the fair copy on 8/12/06 would be impossible when the fair copy itself was signed on 29/12/06 - the impugned order is not sustainable and, hence, has to be set aside - in favour of assessee.

Summary

Issues Involved:
1. Classification of services provided by the appellant.
2. Inclusion of reimbursable expenses in the taxable value.
3. Timeliness of the review order passed by the Commissioner.

Issue-wise Detailed Analysis:

1. Classification of Services Provided by the Appellant:
The appellant, a dealer-operated godown operator for M/s. IOC Ltd. (IOCL), was accused by the Department of providing clearing and forwarding (C&F) agent services, which are taxable under Section 65(105)(i) of the Finance Act, 1994. The appellant had neither obtained service tax registration nor paid any service tax, leading to a show cause notice demanding service tax of Rs. 5,43,618/- for the period from 1.3.2000 to 31.12.2003, along with interest and penalties under Sections 75A, 76, 77, and 78 of the Finance Act, 1994.

2. Inclusion of Reimbursable Expenses in the Taxable Value:
During adjudication, the appellant argued that the rate of Rs. 760/- per KL charged to IOCL included reimbursable expenses such as godown rent, transportation, salary of staff, electricity, travel, and telephone. The appellant contended that service tax should be charged only on their commission, excluding reimbursable expenses. The Assistant Commissioner accepted this plea, confirming a service tax demand of only Rs. 94,272/- and dropping the remaining demand of Rs. 4,49,346/-. However, the jurisdictional Commissioner reviewed this decision, asserting that service tax should be charged on the gross amount without deductions for reimbursable expenses. The Commissioner confirmed the original demand of Rs. 5,43,618/- and imposed penalties.

3. Timeliness of the Review Order Passed by the Commissioner:
The appellant challenged the review order on the grounds of being time-barred, as it was passed after the two-year limitation period prescribed under Section 84(5) of the Finance Act, 1994. The Assistant Commissioner's order was dated 15.12.2004, and the review order was issued on 29.12.2006. The appellant argued that signing the order on the note sheet does not constitute passing the review order. The Department contended that the review order was signed on 8.12.2006, and only the fair copies were issued on 29.12.2006.

Judgment Analysis:
The Tribunal carefully considered the submissions and perused the records. It was noted that under Section 84(5) of the Finance Act, 1994, no order should be passed after the expiry of two years from the date on which the order sought to be revised was passed. The Tribunal referred to the Supreme Court's judgment in CCE vs. M.M. Rubber Co., which clarified that the date of passing the order is when it is made public or dispatched, not merely when it is signed on the note sheet. The Tribunal found that while the review order was signed on the note sheet on 8.12.2006, the fair copy was signed and dispatched only on 29.12.2006, beyond the two-year limitation period. Consequently, the review order was deemed time-barred and invalid.

Conclusion:
The Tribunal set aside the impugned order, ruling that the review order was not sustainable as it was passed after the expiry of the prescribed limitation period. The appeal was allowed, and the order was pronounced on 20.12.2011.