2019 (2) TMI 1877 - AT - Service Tax

Customs House Agent service - It appeared to the Revenue that the respondent have contravened the provisions of Section 67 of the Act, as amended, and Rules made thereunder and made payment of service tax only on a portion of gross amount received for providing the taxable service - HELD THAT - It is on record that the DGCEI conducted investigation considering the respondent as CHA only but on later point of time when respondent stated the fact about non-registration as CHA which is also admitted in show cause notice itself that the respondent were not registered as a CHA under sub-section (2) under Section 146 of the Customs Act, 1962 and were actually work through registered CHA Pooja Travels and later on categorised the respondent as clearing and Forwarding Agent. Learned Adjudicating Authority is, therefore correct in holding that the show cause notice ambiguous inasmuch as whether the respondent has contravened the value related to CHA service or related to clearing and forwarding agent service or to some other service. The Commissioner has correctly held that service provider can be called as the Customs House Agent, if they are granted licence temporarily or otherwise, under CHA Regulations made under Section 142(2) of the Customs Act. It is admitted fact that respondent is not CHA which is also mentioned in the impugned order. But we find that the respondent has registered as Customs House Agent by the service tax Department even though the same is contrary to the provisions of the Finance Act as evident from the definition of Customs House Agent under Section 65(35) of the Act and taxable services under the provisions of Section 65(105) of the Act. The transportation charges etc. had been paid by their client and the Service Tax on the said charges had also been discharged by their client as consignee on reverse charge basis. Therefore, the same cannot be charged to Service Tax on account of the respondent once again - the respondent has erroneously got themselves registered with the Service Tax Department under the category of Customs House Agent and paid Service Tax. The erroneous registration will not rendered them liable to pay the service tax as CHA and service tax cannot be collected from them. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Whether the respondent contravened the provisions of Section 67 of the Finance Act, 1994 by not paying service tax on the full amount received.
2. Whether the respondent qualifies as a Customs House Agent (CHA) under Section 65(35) of the Finance Act, 1994.
3. Whether the amounts recovered by the respondent through debit notes are liable to service tax.
4. Whether the respondent's erroneous registration as a CHA affects their service tax liability.

Detailed Analysis:

Issue 1: Contravention of Section 67 of the Finance Act, 1994

The Revenue alleged that the respondent evaded service tax amounting to ?64,55,953 by paying tax only on a portion of the gross amount received for providing services. The investigation revealed that the respondent charged ?1,500 to ?2,000 per container but paid service tax on only ?300 per container. The adjudicating authority dropped the demand, stating the respondent acted as a "pure agent" and fulfilled all conditions under Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006.

Issue 2: Qualification as a Customs House Agent (CHA)

The Revenue contended that the respondent acted as a CHA without registration under Section 146 of the Customs Act, 1962. The respondent facilitated CHA services through M/s. Deep Handling Services and M/s. Pooja Travels and Cargo Services. The adjudicating authority held that the respondent did not qualify as a CHA under Section 65(35) of the Finance Act, as they were not licensed under the Customs House Licensing Regulations, 2004.

Issue 3: Liability of Amounts Recovered through Debit Notes

The Revenue argued that amounts recovered through debit notes for various expenses (e.g., documentation, crane handling, labor charges) were part of the taxable service. However, the adjudicating authority found that these were reimbursement charges and not includible in the taxable value under Section 67 of the Finance Act. The Tribunal upheld this view, citing precedents like CCE, ST, Ludhiana v. Gurudev Handling Private Limited and M/s. Link Intime India Private Limited v. Commissioner of Central Excise, Thane-I.

Issue 4: Erroneous Registration as CHA

The Tribunal noted that the respondent was erroneously registered as a CHA with the Service Tax Department. Despite this, the adjudicating authority correctly held that the respondent was not liable to pay service tax as a CHA. The Tribunal referenced Shram Seva Associates v. Commissioner of Central Excise, Allahabad, emphasizing that no tax can be collected without the authority of law.

Conclusion:

The Tribunal found no infirmity in the adjudicating authority's order, which correctly identified that the respondent did not qualify as a CHA and that the amounts recovered through debit notes were reimbursement charges not subject to service tax. The appeal filed by the Revenue was dismissed, and the impugned order was upheld.