2013 (11) TMI 761 - AT - Service Tax

Business Auxiliary Service - applicant is engaged in the business of cargo handling service and they are also booking space for cargo transportation in Airlines/Ships and pay charges for the same. They collected charges in excess of the charges paid to airlines/ships. According to Revenue, this amount will be taxable under the Business Auxiliary Service. - Held that - In view of the decision in M/s. Leaap International Pvt. Ltd. Versus The Commissioner of Service Tax 2013 (5) TMI 112 - MADRAS HIGH COURT , prima facie case is against the assessee - stay granted partly.

Summary

Issues:
1. Change of respondent's name to Commissioner of Service Tax, Chennai.
2. Stay applications for waiver of pre-deposit of tax in two appeals.
3. Taxability of charges collected in excess of charges paid to airlines/ships under Business Auxiliary Service.

Issue 1: Change of respondent's name to Commissioner of Service Tax, Chennai
The applicants filed applications seeking a change in the respondent's name to Commissioner of Service Tax, Chennai due to their registration with the Service Tax Commissionerate, Chennai. The Miscellaneous applications were allowed, and it was ordered that the respondent's name shall be known as Commissioner of Service Tax, Chennai in all future proceedings.

Issue 2: Stay applications for waiver of pre-deposit of tax in two appeals
The applicant filed stay applications for the waiver of pre-deposit of substantial amounts of tax in two appeals. After hearing both sides and examining the records, it was noted that the applicant is involved in cargo handling services and booking space for cargo transportation in Airlines/Ships. The Revenue contended that the excess charges collected by the applicant would be taxable under the Business Auxiliary Service.

Issue 3: Taxability of charges collected in excess of charges paid to airlines/ships under Business Auxiliary Service
The consultant representing the applicant argued that the excess charges were part of ocean freight used for export and should be considered as part of profit on which tax cannot be demanded. However, the Revenue argued that the charges were taxable under Business Auxiliary Service. Reference was made to a previous Tribunal case involving a similar issue where pre-deposit was partially directed.

In light of the arguments presented, the Tribunal analyzed the nature of the services provided by the applicant and the purpose of the charges collected in excess of those paid to airlines/ships. The Tribunal found that the excess amount collected was in relation to the procurement of services utilized by the exporter/importer, falling within the ambit of Business Auxiliary Service. Therefore, the Tribunal directed the applicant to pre-deposit a specified sum within a given timeframe, with the balance amount of tax, penalty, and interest waived and recovery stayed during the pendency of the appeal.

In conclusion, the Tribunal's decision was based on the interpretation of the services provided by the applicant and the applicability of the Business Auxiliary Service to the excess charges collected. The Tribunal's order for pre-deposit and waiver of the balance amount reflected a careful consideration of the facts and circumstances of the case, aligning with previous decisions on similar issues.