2018 (7) TMI 1925 - AT - Service Tax

Valuation - inclusion of transportation charges under C F service - HELD THAT - The appellant had rendered transport services and C F services under separate agreements on principal to principal basis and also raised separate invoices - The appellant relied on the Tribunal s decision in the case of E.V Mathai Co. Vs CCE 2003 (5) TMI 1 - CESTAT BANGALORE In this case the Tribunal held that transportation charges received by C F Agent under a separate contract and on the basis of separate bills would not be includible in the taxable value for C F Services. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Allegations of suppression of taxable value in ST-3 returns
Interpretation of Service Tax Rules, 1994
Discrepancy between financial statements and ST-3 returns
Separate agreements for C&F services and transportation services
Applicability of reverse charge mechanism
Appellant's compliance with tax payments

Analysis:
The case involved allegations of suppression of taxable value in ST-3 returns by the appellant, who provided Clearing and Forwarding, Transport, and Sales Promotion services. The Adjudicating Authority confirmed the demand, citing discrepancies between the declared value in returns and financial statements. The appellant contended that the demand contradicted Rule 6 of Service Tax Rules, 1994, arguing that financial statements follow accrual basis accounting, while tax is paid upon receipt of service value. The appellant also highlighted separate agreements and invoices for C&F and transportation services.

The Adjudicating Authority imposed a demand for evasion of Service Tax, which the appellant challenged before the Tribunal. The appellant demonstrated compliance with tax payments and reconciliation of taxable values. The Tribunal noted separate agreements for services, citing precedents where transportation charges were not included in C&F service value. The appellant served clients subject to reverse charge mechanism and provided evidence of tax payment by clients.

After reviewing submissions and lower authority's order, the Tribunal found no justification for the tax levy. The reconciliation statement and ST-3 returns supported the appellant's payment of taxes upon service value receipt. Consequently, the Tribunal set aside the impugned order, allowing the appeal with any consequential benefits. The judgment emphasized the appellant's adherence to tax payment timelines and separate service agreements, leading to the decision in their favor.