2008 (9) TMI 128 - AT - Service Tax

Assessee is aggrieved with denial of benefit of deduction of wharfage charges paid to the port authorities and collected as part of lump-sum payment from their clients - appellant claim that the wharfage charges which is a statutory port dues was eligible for deductions from value of Custom House Agent services for calculating its taxable value is accepted - ST-3 returns were assessed and finalized and therefore there is no malafide intention to suppress facts extended period not invokable

Summary

Issues:
1. Benefit of deduction of wharfage charges paid to port authorities.
2. Grant of benefit of time bar.
3. Invocation of the larger period for extended period claiming concealment with mala fide intention.

Analysis:
1. Benefit of deduction of wharfage charges paid to port authorities:
The appellant claimed that wharfage charges, a statutory port due, should be deducted from the value of Custom House Agent services for calculating taxable value. The Commissioner (A) did not allow this deduction based on a Board Circular, stating that only 15% of lump-sum receipts could be treated as taxable services. However, the Circular clearly stated that certain expenses, including statutory levies like wharfage charges, are not included in computing service tax. The Tribunal found that the Commissioner's decision was incorrect as the Circular explicitly allowed for deductions eligible to Custom House Agents. Therefore, the order denying the deduction of wharfage charges was set aside, and the appellant's appeal was allowed.

2. Grant of benefit of time bar:
The appellant argued that since the ST-3 returns had been finalized, the department had full knowledge of the facts, and hence, the larger period for invoking time bar was not sustainable. The Tribunal agreed with this argument, noting that once the returns were assessed and finalized, there was no malafide intention to suppress facts. Therefore, the Tribunal held that the appellant succeeded on this point, and the impugned order was set aside in its entirety.

3. Invocation of the larger period for extended period claiming concealment with mala fide intention:
The Revenue was aggrieved by the Commissioner (A) not invoking the larger period for extended period claiming concealment with mala fide intention. However, the Tribunal upheld the Commissioner's decision, stating that since the self-assessment procedure was adopted, the liability of calculating and discharging duty rested with the assessee alone. The Tribunal found that there was no malafide intention to suppress facts, and hence, the charge of concealment resulting in short payment of duty was not sustainable. Therefore, the Revenue's appeal on this issue was dismissed.

In conclusion, the Tribunal allowed the appellant's appeal regarding the deduction of wharfage charges and the grant of benefit of time bar, while dismissing the Revenue's appeal on invoking the larger period for concealment. The impugned order was set aside, and the appellant's appeal was allowed, with no merit found in the Revenue's appeal.