2014 (6) TMI 834 - AT - Service Tax

Leviability of Service Tax - consignment agency services - Clearing and Forwarding Agent Service - job of conversion of raw materials into finished goods on job-work basis - Held that - Applicant are engaged by M/s. Tata Steel Ltd. for conversion of raw material into finished goods and deliver the same to various stockyards. For that the Applicant are paid a fixed conversion charges. We also find an agreement dated 30.03.1998 whereby the Applicant also agreed to provide the service of a consignment agency service to M/s. Tata Steel Ltd. and the remuneration fixed was at Rs.250/275 per M.T. It is the claim of the Applicant that even though they have entered into the said agreement with M/s. Tata Steel Ltd. they have not received any consignment agency charges from M/s. Tata Steel Ltd. beyond the conversion charges received from M/s. Tata Steel Ltd. Case has been built against the Applicant as is clear from the impugned notices that the Applicant had received Rs.250/275 per M.T. as consignment agency charges from M/s. Tata Steel Ltd., but failed to discharge Service Tax as required, under the relevant provisions of Finance Act, 1994. - Applicant had not received the said amount of Rs.250/275 per M.T. even though an agreement to that effect had been entered between the Applicant and M/s. Tata Steel Ltd. In these circumstances, we are of the opinion that the Applicant could able to make out a prima facie case for total waiver of pre-deposit of dues adjudged. Accordingly all dues adjudged is waived and its recovery stayed during pendency of the Appeals - Stay granted.

Summary

Issues:
Leviability of Service Tax on consignment agency services under 'Clearing and Forwarding Agent Service' alleged to have been rendered.

Analysis:
The judgment revolves around the issue of whether the Applicant is liable to pay Service Tax on consignment agency services provided to M/s. Tata Steel Ltd. in addition to conversion charges. The Applicant contended that they did not receive any separate consignment agency charges beyond the conversion charges paid by M/s. Tata Steel Ltd. The Ld. Sr. Advocate argued that since the Applicant did not receive any amount against the consignment agency agreement, there should be no liability of Service Tax. The Applicant had paid service charges to other consignment agents and availed CENVAT Credit on the Service Tax paid by them. The Ld. Sr. Advocate emphasized that the Applicant had only received conversion charges and had discharged Central Excise duty on those charges.

The Revenue argued that the consignment agency services were included in the conversion charges paid by M/s. Tata Steel Ltd. to the Applicant. Even though the consignment agency charges were not separately billed, the Revenue contended that they were part of the overall remuneration received by the Applicant and hence liable to Service Tax separately. The Revenue maintained that the Applicant had agreed to provide consignment agency services in addition to conversion of raw materials, and the remuneration for such services was fixed at Rs.250/275 per M.T.

After hearing both sides and examining the records, the Tribunal found that the Applicant had not received any consignment agency charges beyond the conversion charges from M/s. Tata Steel Ltd. The Tribunal noted that the case against the Applicant was based on the assumption that they had received the consignment agency charges, which was not supported by evidence. The Tribunal was not convinced by the Revenue's argument that the charges were included in the conversion charges and required separate Service Tax payment. Accordingly, the Tribunal held that the Applicant had made a prima facie case for total waiver of pre-deposit of dues adjudged. Consequently, all dues adjudged were waived, and the recovery was stayed during the pendency of the Appeals. The Stay Petitions were allowed, and the judgment was pronounced and dictated in the open court.