2016 (7) TMI 1176 - AT - Service Tax

Business Auxiliary services - income from ocean freight is more than the ocean freight expenses. - It appeared to the Department that service tax was not paid on ocean freight charges and that further ocean freight charged and collected from the shipper was more than the ocean freight amount paid to the shipping lines. - It was also appeared to the Department that services provided by the appellant to SEZ units were also liable for service tax liability. Held that - the predominant part of the demand viz. that relating to service tax held as payable on the reimbursable amounts being covered by the cases referred to by the learned advocate for the appellant. We also find that Mumbai Tribunal order in the case of CCE Goa Vs. Machado 10 lakhs during investigation. In the circumstances we find that balance of convenience lies in favour of the appellants in the matter of stay and we therefore order full waiver of pre-deposit beyond the 10 lakhs already deposited by them. There will be stay of recovery in the matter pending disposal of the case.

Summary

Issues:
1. Service tax liability on ocean freight charges and expenses
2. Irregular availment of CENVAT credit
3. Service tax liability on amounts received from SEZ units

Analysis:
1. The appellants, providing steamer agent services, faced a show-cause notice for not paying service tax on ocean freight charges exceeding expenses and for service provided to SEZ units. The adjudicating authority confirmed demands including service tax on excess ocean freight charges, short payment on services, reimbursable amounts, irregular CENVAT credit, and other P&L account amounts. The total liability was ?1,82,83,322, with penalties and interest imposed.

2. The appellant's counsel cited precedents to argue against the demands. The Tribunal found the demands related to reimbursable amounts were covered by previous cases. The Mumbai Tribunal distinguished a Larger Bench decision regarding reimbursable amounts. Considering the appellant's deposit of ?10 lakhs during investigation, the Tribunal granted a full waiver of pre-deposit beyond this amount, ordering a stay on recovery pending case disposal.

3. The Assistant Commissioner requested an early hearing due to revenue implications, which both parties agreed to. The Tribunal directed the case to be listed for an early hearing on 02/11/2016, acknowledging the potential impact on similar cases.