2013 (12) TMI 259 - AT - Service Tax

Demand of service tax - Penalty u/s 76 - Appellants appointed as consignment agent - Department imposed demand holding that assessee carrying business of Clearing and Forwarding agents - Assessee contends that they were acting merely agent of the client and their activity did not come within the purview of Section 65(72) of the said Act, as they did not undertake services, normally rendered by Clearing and Forwarding agents - Third show cause notice issued while 2 notices already existing - Extended period - Whether appellants are liable to pay service tax on their activities under Clearing & Forwarding Agents Service - Held that - appellants did not provide any information to the Department at the time of issue of earlier Show Cause Notice - Therefore, the objection raised by the appellants on Show Cause Notice dated 23.09.2003 are not sustainable - activities of appellant have been classified Clearing & Forwarding Agent Service in appellant s own case by this Tribunal reported in 2008 (5) TMI 96 - CESTAT, KOLKATA . Show Cause Notice in this case was issued on 23.09.2003. ST-3 Returns were submitted by the appellants on 22.11.2002. Therefore Show Cause Notice is within one year from date of filing of ST-3 Returns which is relevant date for computing the time limit. We therefore hold that demand is within time limit of normal period. We therefore hold Commissioner has rightly confirmed the Service Tax along with interest against the appellant - Penalty u/s 76 upheld - Decided in favour of Revenue.

Summary

Issues Involved:
1. Liability of the appellants to pay service tax under Clearing and Forwarding Agents Service.
2. Validity of multiple Show Cause Notices for the same period.
3. Applicability of the extended period of limitation.
4. Entitlement to cum tax benefit and deduction on reimbursement charges.
5. Imposition of penalties under Sections 76 and 78 of the Finance Act.
6. Validity of the Revenue's appeal for enhancement of penalty.

Detailed Analysis:

Liability of the Appellants to Pay Service Tax:
The main issue was whether the appellants' activities fell under the category of Clearing and Forwarding Agents Service, making them liable for service tax. The appellants argued that they were not engaged in clearing goods and thus did not qualify as Clearing and Forwarding Agents. However, the Tribunal found that the appellants acted as consignment agents for TISCO, and under the inclusive definition of Clearing and Forwarding Agent Service in Section 65(16) and 65(72) of the Finance Act, their activities were taxable. This conclusion was supported by previous Tribunal decisions and the Karnataka High Court's ruling in Mahaveer Generics.

Validity of Multiple Show Cause Notices:
The appellants contended that the third Show Cause Notice dated 23.09.2003 was invalid because two previous notices had already been issued for the same period. The Tribunal, however, noted that the first notice dated 09.10.2002 did not specify the amount of tax due to the lack of information provided by the appellants, and the second notice dated 20.05.2003 was issued under Section 71(2) merely to request documents. Since these notices did not result in any adjudication, the third notice was deemed valid.

Applicability of the Extended Period of Limitation:
The appellants argued that the extended period of limitation could not be invoked since earlier notices had already been issued. The Tribunal found that the Show Cause Notice dated 23.09.2003 was within the normal period of one year from the date of filing of ST-3 returns on 22.11.2002. Therefore, the demand was within the time limit, and the Commissioner rightly confirmed the Service Tax along with interest.

Entitlement to Cum Tax Benefit and Deduction on Reimbursement Charges:
The appellants claimed cum tax benefit and deduction on reimbursement charges. The Tribunal rejected this claim, noting that cum tax benefit is only available if the price includes the tax payable, as per the Supreme Court decision in Amrit Agro Industries Ltd. The Commissioner correctly denied this benefit as the demand pertained to a period before the relevant amendment on 18.04.2006. Additionally, deductions for reimbursement charges were not permissible under Section 67 of the Act.

Imposition of Penalties under Sections 76 and 78:
The appellants argued that no penalties should be imposed since they had approached the Department and paid some amount of service tax under protest. However, the Tribunal noted that the appellants did not register until 20.05.2002 and filed returns only on 22.11.2002, with incomplete payment of service tax and interest. Therefore, they were not entitled to relief under Section 80 of the Finance Act. The Tribunal upheld the simultaneous imposition of penalties under Sections 76 and 78, in line with the Delhi High Court's decision in Bajaj Travels Ltd.

Validity of the Revenue's Appeal for Enhancement of Penalty:
The Revenue argued that the penalty under Section 76 should be calculated as per the amended provisions effective from 18.04.2006. The Tribunal agreed with this contention and allowed the Revenue's appeal regarding the penalty for the period from 18.04.2006 to 09.05.2008.

Conclusion:
The Tribunal rejected the appeal of the assessee and upheld the imposition of service tax, interest, and penalties under Sections 76 and 78 of the Finance Act. The Revenue's appeal for enhancement of the penalty was allowed, and the cross objections were disposed of accordingly.