2008 (11) TMI 195 - AT - Service Tax

CHA Service - Service Tax paid on 15% amount - while CHA were paying Service Tax at 15% of the gross receipts revenue proceeded to levy Service Tax on the balance 85% on the ground that the appellants are rendering Port Services held that Once the appellant discharges Service Tax liability at 15% of the gross receipts in terms of the Public Notice then the balance amount cannot be subjected to Service Tax. Moreover the High Court of Karnataka s decision confirms the view taken by this Bench with regard to stevedoring activity and it has held that the same would not amount to Port Services - prima facie the appellants have a strong case on merits pre deposit waived.

Summary

Issues:
1. Pre-deposit requirement of Service Tax/Penalties.
2. Interpretation of 'Port Services' in relation to stevedoring activities.
3. Justification for invoking the larger period for the demand.
4. Request for waiver of pre-deposit amounts demanded in the impugned order.

Issue 1: Pre-deposit requirement of Service Tax/Penalties
The appellant was directed to pre-deposit significant amounts towards Service Tax and penalties for a specific period. The appellant, a Custom House Agent, had been paying Service Tax at 15% on gross receipts as per a Public Notice. However, the revenue sought to levy Service Tax on the remaining 85% for stevedoring services, claiming it fell under 'Port Services'. The appellant argued that this issue had been stayed previously and cited precedents where stevedoring was not considered 'Port Services'. The appellant contended there was no intention to evade taxes, and thus, requested a waiver of the pre-deposit amounts.

Issue 2: Interpretation of 'Port Services' in relation to stevedoring activities
The departmental representative argued that the appellant's activities fell within the scope of 'Port Services', despite conflicting decisions on the matter. However, the Tribunal found merit in the appellant's case. It noted that if Service Tax was already paid on gross receipts, the balance amount could not be taxed. Citing a Karnataka High Court decision, the Tribunal affirmed that stevedoring did not constitute 'Port Services'. Consequently, the Tribunal decided to waive the pre-deposit of the entire Service Tax and penalties until the appeal's final disposal, allowing a stay on further recoveries.

Issue 3: Justification for invoking the larger period for the demand
The appellant asserted that there was no suppression of facts to evade taxes, questioning the need for invoking a larger period for the demand. The Tribunal, after careful consideration, agreed with the appellant's position on the merits. It found no justification for imposing penalties over a larger period, especially considering the precedents and the absence of tax evasion intent.

Issue 4: Request for waiver of pre-deposit amounts demanded in the impugned order
Following a thorough review of the case, the Tribunal granted the appellant's request for waiving the pre-deposit amounts demanded in the impugned order. The Tribunal acknowledged the significant sum involved and scheduled the matter for final hearing on a specified date, allowing a stay on further recoveries until the appeal's resolution.