2023 (12) TMI 1288 - AT - Service Tax

Failure to discharge service tax liability properly for the taxable services rendered - Business Auxiliary Services - Goods Transport Agency Services - short payment of service tax on Custom House Agency Services - Time Limitation - Suppression of facts or not - difference of opinion. HELD THAT - In view of the difference of opinion between the Members of the Bench regarding Service tax payable on Business Auxiliary Service (BAS) and on Custom House Agent Service (CHA), the following issues which arise from the appeal are framed for resolution (i) Whether the demand of service tax on BAS and CHA services is liable to be set aside on the basis of submissions made and following the ratio of judgments / case laws submitted. OR (ii) Whether the Tribunal being the last fact-finding authority is required to examine the facts, written agreement / contract between the parties and in its absence remand the matter to the Original Authority for giving an opportunity to the appellant to adduce evidence as may be found necessary for determining the issue.

Summary

Issues Involved:
1. Service tax liability under Business Auxiliary Services (BAS)
2. Service tax liability under Custom House Agent Services (CHA)
3. Service tax liability under Goods Transport Agency Services (GTA)
4. Limitation and suppression of facts

Summary:

1. Service Tax Liability under Business Auxiliary Services (BAS):
The department alleged that the appellant did not discharge service tax on incentives/discounts received from airlines and shipping lines under BAS. The appellant argued that these incentives were profits from buying and selling cargo space, not for promoting airline services, and thus not taxable. The Tribunal, relying on multiple precedents, concluded that the appellant's activities did not constitute BAS as they did not promote or market airline services. The demand for service tax under BAS was set aside.

2. Service Tax Liability under Custom House Agent Services (CHA):
The appellant contended that expenses reimbursed by clients should not form part of the taxable value. The Supreme Court's decision in UOI Vs Intercontinental Consultants and Technocrats Pvt. Ltd. was cited to support this claim. The Tribunal agreed, stating that reimbursable expenses are not part of the gross value and thus not taxable. The demand under CHA services was set aside.

3. Service Tax Liability under Goods Transport Agency Services (GTA):
The appellant did not contest the demand under GTA services. The Tribunal upheld the demand and interest on GTA services but set aside the penalties imposed.

4. Limitation and Suppression of Facts:
The appellant argued that the Show Cause Notice (SCN) was issued beyond the permissible period and that there was no suppression of facts. The Tribunal found that the figures for the demand were based on the appellant's profit and loss account, which was properly accounted for. The demands under BAS and CHA were interpretational, and the appellant's failure to discharge service tax under GTA was due to a bona fide belief. The Tribunal ruled in favor of the appellant on the issue of limitation and set aside the penalties under Section 80 of the Finance Act, 1994.

Separate Judgment by Member (Technical):
Member (Technical) M. Ajit Kumar disagreed with the findings on BAS and CHA services, stating that the facts and agreements between the parties needed deeper examination. He proposed remanding the matter to the Original Authority for a fresh determination of the issues, excluding the uncontested GTA services. The points of difference were framed for resolution, emphasizing the need to examine the written agreements and factual evidence.

Conclusion:
The Tribunal partly allowed the appeal, setting aside the demands and penalties under BAS and CHA services, while upholding the demand under GTA services. The matter was remanded for re-examination on specific issues as per the separate judgment by Member (Technical).