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2016 (12) TMI 538 - AT - Service TaxTaxability - storage and warehouse charges - C&F agent service - Held that - The scope of the service under storage and warehousing is different from the service of renting of immovable property which stands introduced in the statute from a later date. The CBEC vide their clarification F. No. B-11/1/2002-TRU dated 1.8.2002 has clarified the scope of the service under storage and warehousing. It has been specifically explained that mere renting of space cannot be said to be in the nature of storage and warehousing of goods. The essential test is whether the storage keeper provides for security of goods, loading unloading and stacking of goods in the storage area. C&F agent service - inclusion of reimbursement of expenses - Held that - The normal activity of C&F agent is limited to arranging for despatch of the goods of the principal by engaging transport. However, the cost of transportation need not be borne by him. In the present case, the costs of transportation, when incurred by the assessee, have been reimbursed by principal. The value of taxable service in relation to clearing and forwarding operations is the gross amount charged for such services under Section 67. This has to be taken to mean the amount charged for providing the service. In the present case the service tax stands demanded on the total amount paid to the assessee by the principal. Clearly, there is no prescription to include reimbursable expenses in the total value of taxable service. Appeal rejected - decided against Revenue.
Issues:
1. Whether the demand of service tax under storage and warehousing service is justified. 2. Whether the demand of service tax under C&F agent service is valid. Analysis: 1. Storage and Warehousing Service: The controversy arose during a departmental audit when the Revenue alleged that the assessee received charges for storage and warehousing service. The Revenue demanded service tax based on the difference in income shown in the trial balance and ST-3, amounting to ?65,26,695 under storage and warehousing charges. The Commissioner dropped the demand, leading to the Revenue's appeal. The Revenue argued that the charges accounted for under warehousing charges in the balance sheet are taxable. However, the Commissioner found that the assessee only provided renting of immovable property service, not storage and warehousing service. The Tribunal upheld the Commissioner's decision, stating that renting space does not qualify as storage and warehousing service unless specific activities like security, loading, unloading, and stacking of goods are provided. 2. C&F Agent Service: The scope of C&F service was clarified based on a Tribunal's Larger Bench decision, indicating the activities undertaken by a C&F agent. The Revenue contended that service tax should be levied on the total amount received by the agent, including reimbursed expenses. However, the Commissioner held that reimbursable expenses need not be included in the taxable service value. The Tribunal agreed with the Commissioner's findings, stating that the service tax should be based on the amount charged for providing the service, not including reimbursable expenses. The Tribunal referenced relevant case laws supporting this view and upheld the impugned order, rejecting the Revenue's appeal. In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the Commissioner's decision to drop the demand for service tax under both storage and warehousing service and C&F agent service. The judgment provides detailed analysis and legal interpretations supporting the decisions on each issue raised in the appeal.
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