2015 (11) TMI 902 - AT - Service Tax

Storage or warehouse service - whether proceed of auction of warehoused imported goods in case of importer abandoned the goods, shall be considered as service charges towards storage or warehouse and is liable for service tax - Held that - Service tax was proposed to be demanded on the sale proceed of the auction of the abandoned imported goods. In the whole transaction no service recipient is existing; therefore there is no question of providing any service to any person. Merely for the reason that Section 150 provides for distribution of the amount of proceed of auction that will not empowered the government to recover service tax on the auction proceeds. - Commissioner with proper application of mind given detailed finding not only on the facts but also on the law point of Section 48, 150 of Customs Act, 1962 and also discussed in detail the service tax provision and referred Master Circular dated 23/8/2007 and Board Circular dated 1/8/2002. - there is absolutely no infirmity in the order of the Ld. Commissioner (Appeals), therefore the same has to be sustained. We are therefore upheld the impugned order - Decided against Revenue.

Summary

Issues involved: Whether proceeds of auction of warehoused imported goods in case of importer abandoned the goods shall be considered as service charges towards storage or warehouse and is liable for service tax.

Analysis:
1. The appeal filed by Revenue challenged the Order-in-Appeal passed by the Commissioner of Central Excise (Appeals)-II, Mumbai, where the Ld. Commissioner set aside the Order-in-Original and allowed the appeal of the respondent.

2. The main issue in the case was whether the proceeds of auction of abandoned imported goods should be considered as service charges towards storage or warehouse, making it liable for service tax.

3. The Revenue argued that as per Section 150 of the Customs Act, 1962, the proceeds of the auction should be considered as payment towards storage and warehouse charges, thus subject to service tax since the respondent retained the proceeds and adjusted them against storage charges.

4. The respondent's representative contended that the auction proceeds were not received from any service recipient as the goods were abandoned, and thus, the transaction should not be liable to service tax. They also cited Board Instruction clarifying that no cargo handling service is rendered in case of abandoned cargo, hence no service tax is leviable.

5. The Tribunal carefully considered the arguments from both sides.

6. The Tribunal found that in the absence of a service recipient in the transaction, there was no service provided to any person. The Ld. Commissioner's detailed findings on the legal aspects of the Customs Act, service tax provisions, and relevant circulars supported the conclusion that the auction proceeds were not related to providing any service and were not liable to service tax. The Tribunal upheld the Ld. Commissioner's order, dismissing the appeal of the Revenue.