2013 (10) TMI 858 - AT - Service Tax

Valuation - inclusion of reimbursement of freight - steamer agent - booking of space in the ships belonging to other companies - Extended Period of Limitation Application to Produce Additional Evidence - Revenue was of the view that the appellant should have paid service tax on the ocean freight element collected from the customers Held that - Following Gudwin Logistics vs. CCE 2009 (11) TMI 157 - CESTAT, AHMEDABAD - There was absolutely no indication as to what was the ratio of the decisions cited and why they were not relevant and whether there were any contrary decisions considered by him for this purpose - Similarly there were no findings as to why extended period can be invoked in this case and why penalties should be imposed - To consider an appeal against an order, there should be some reasoning in the order which can be considered whether it was appropriate or not. The decision in the case of Sri Bhagavathy Traders 2011 (8) TMI 430 - CESTAT, BANGALORE is not relevant since the ocean freight is nothing but reimbursement of actual expenditure and when the Steamer Agent collecting the freight on behalf of the shipping company and charging his commission separately it is nothing but a reimbursement of the cost. It was also submitted that in majority of the cases the appellant is not even a Steamer Agent but books shipping space for other customers and in such cases he is only doing this for the customers and charging for his services. In the, absence of any reasoning in the order, it becomes difficult to consider the same in appeal - In these circumstances, we find that the matter was required to be remanded to the original adjudicating authority.

Summary

Issues:
1. Liability of the appellant to pay service tax on ocean freight collected from customers.
2. Consideration of additional evidence by the Tribunal.
3. Merits of the demand and reliance on legal precedents.
4. Justification for penalties imposed and principles of natural justice.
5. Relevance of legal decisions cited by both parties.
6. Applicability of cited legal decisions to the case.
7. Remand of the matter to the original adjudicating authority for a well-reasoned order.

Issue 1: The appellant, a steamer agent, was challenged on the liability to pay service tax on ocean freight collected from customers. The Tribunal found the matter necessitated remand to the original adjudicating authority due to lack of reasoning in the order and the need for consideration of principles of natural justice. The appellant's submissions regarding the demand's merit, reliance on legal precedents, and absence of justification for penalties were key points in this issue.

Issue 2: The Tribunal allowed the appellant's miscellaneous application to produce additional evidence, which included proceedings before the original adjudicating authority. These additional evidences were deemed admissible as they were not available to the appellant at the time of filing the appeal, ensuring a fair consideration of all relevant information.

Issue 3: The appellant relied on the decision of the Tribunal in a specific case and orders of the Commissioner (Appeals) to contest the demand's merit. However, the Tribunal observed that the original adjudicating authority failed to consider these submissions adequately, leading to the necessity of remanding the matter for a well-reasoned decision.

Issue 4: The Tribunal noted the lack of justification for penalties imposed under various Sections of the Finance Act, 1994, indicating a disregard for principles of natural justice in the original order. This factor contributed to the decision to remand the matter for proper consideration.

Issue 5: Both parties cited legal decisions to support their arguments. However, the Tribunal found that the Commissioner's order did not adequately address the relevance or applicability of these legal precedents, leading to a lack of reasoning in the decision-making process.

Issue 6: The Tribunal analyzed the legal decisions cited by the learned Additional Commissioner and found them to be irrelevant to the case at hand. The Tribunal highlighted the distinctions between the issues addressed in the cited decisions and the specific matter concerning the inclusion of ocean freight as a cost of service rendered by the steamer agent.

Issue 7: Ultimately, the Tribunal decided to remand the matter to the original adjudicating authority, leaving all issues open for reconsideration. The Tribunal emphasized the importance of a well-reasoned order that considers all submissions and ensures a fair opportunity for the appellant to present their case.