2015 (1) TMI 1044 - HC - Service Tax

Refund claim - Whether CESTAT was right in considering the charges for Terminal Handling charges and Repo Charges covered under Sections 65(105)(zn), despite clear legal provisions given in the Finance Act, 1994 and relevant Notification issued thereunder - Held that - Tribunal had relied on its previous decision in case of M/s. Macro Polymers Pvt. Ltd. v. CCE, Ahmedabad, dated 4-6-2010 - 2010 (6) TMI 257 - CESTAT, AHMEDABAD . In such a decision, the Tribunal considered various aspects of exemption under the said Notification vis-a-vis services covered by virtue of Section 65(105)(zn) of the Finance Act, 1994. - Government issued another Notification No. 17/2009-S.T., dated 7-7-2009, in which for all services classified under Clause (105) of Section 65, exemption was granted from payment of Service Tax paid on services commonly known as terminal handling charges . Of course, as rightly pointed out by the learned counsel for the respondent, such Service Tax had to be paid by the service provider and refund thereto had to be claimed by the exporters services recipients. However, we are not concerned with the modalities of this Exemption. Suffice to note, juxta position to the earlier Notification, dated 6-10-2007, in the subsequent Notification, dated 7-7-2009, the exemption was available to all services classified under sub-clause (zn) of Clause 105 of Section 65. It is thus, not in dispute by virtue of subsequent Notification, dated 7-7-2009, there is no conflict between the department and the assessee. The period of conflict therefore, gets narrowed down to two dates between the two Notifications. - The department seems to be contending that the services provided by the respondents would not fall under sub-clause (zn) of Clause 105 of Section 65. Even if, Department has some arguable point there, however, in the present appeals, it is not disputed that in majority of the cases, Service Tax were collected under such entry. When the assessee claimed exemption, as provided in Notification, dated 6-10-2007, the Department has issued Show Cause Notice why the refund claim should not be rejected, since Service Tax does not fall under Section 65(105)(zn) at all. Having previously collected the Service Tax under such heading, we are doubtful whether such reverse stand could have been taken. In totality of the facts and circumstances of the matter, no question of law arises - Decided against Revenue.

Summary

Issues:
Department's appeal against Tribunal's orders on Repo charges and Handling charges exemption under Notification No. 40/2007-S.T.

Analysis:
The Department appealed against Tribunal orders on Repo charges and Handling charges exemption under Notification No. 40/2007-S.T. The central question raised was whether the CESTAT was correct in considering these charges under Sections 65(105)(zn) despite clear provisions in the Finance Act, 1994. The Tribunal had previously relied on a case involving exemption under the same Notification and Section 65(105)(zn) to support its decision. Subsequently, a new Notification (No. 17/2009-S.T.) was issued, granting exemption for terminal handling charges under Section 65(105)(zn) for all services classified as such. This new Notification resolved any conflict between the Department and the assessee, narrowing down the period of dispute to two specific dates between the two Notifications.

In the judgment, the High Court noted that the exemption under Notification No. 17/2009-S.T. provided total exemption from Service Tax on services like terminal handling charges falling under Section 65(105)(zn) of the Finance Act, 1994. The Court observed that the Department's contention that the services provided did not fall under Section 65(105)(zn) was not strong, especially considering that Service Tax had been collected under that entry in most cases. The Court expressed doubt over the Department's reversal in claiming that Service Tax did not fall under Section 65(105)(zn) after previously collecting it under that category. Ultimately, the Court found no legal issue arising from the facts and circumstances presented, leading to the dismissal of all tax appeals.

Therefore, the High Court dismissed the Department's appeals, emphasizing that the exemption provided under Notification No. 17/2009-S.T. for services falling under Section 65(105)(zn) resolved any conflicts and that the Department's reversal on the collection of Service Tax under that category was questionable. The judgment highlighted the importance of consistency and adherence to legal provisions in tax matters, ultimately upholding the Tribunal's decision on the exemption of Repo charges and Handling charges under the relevant Notification and section of the Finance Act.