2018 (1) TMI 212 - AT - Service Tax

Classification of services - Storage and warehousing services - Whether Facilitation & Administration charges, Auction Gr-1 charges and Shortfall charges would be taxable under the head Storage and warehousing services or otherwise? - Held that - The very classification being in question including the taxability of the impugned service and appellant was not granted full opportunity of hearing on its pleadings both on taxability and classification, the adjudicating authority is expected to re-adjudicate the matter following due course of justice - appeal allowed by way of remand.

Summary

Issues Involved:
1. Classification and taxability of facilitation & administration charges, auction Gr-1 charges, and shortfall charges under storage and warehousing services.
2. Interpretation of Section 65(zza) and Section 65(102) of the Finance Act, 1994.
3. Granting full opportunity of hearing on taxability and classification.
4. Taxability of charges without defined service character.
5. Applicability of cum tax benefit in invoices.

Analysis:

Issue 1: Classification and Taxability of Charges
The appellant disputed the taxation of facilitation & administration charges, auction Gr-1 charges, and shortfall charges under storage and warehousing services. The appellant argued that these charges do not fall within the scope of storage and warehousing services for taxation. The adjudicating authority did not consider the appellant's submissions regarding the classification of these charges under cargo handling services and concluded that reclassification was impermissible.

Issue 2: Interpretation of Relevant Sections
The Revenue sought to tax the impugned items under Section 65(zza) of the Finance Act, 1994, in relation to storage and warehousing services. The definition of "storage and warehousing" under Section 65(102) includes services for goods but excludes services for agricultural produce or by a cold storage. The adjudicating authority is expected to re-adjudicate the matter to ensure due process of justice as the appellant was not granted a full opportunity of hearing on taxability and classification.

Issue 3: Full Opportunity of Hearing
The appellant contended that the adjudicating authority did not grant a full opportunity of hearing on the taxability and classification of the impugned services. Therefore, it is essential for the adjudicating authority to re-examine the matter following proper procedures to ensure justice is served.

Issue 4: Taxability without Defined Service Character
The appellant argued that even if facilitation & administration charges and shortfall charges are taxable under storage and warehousing services, they lack the defined service character required by law. The scope and applicability of the taxing entry under Section 65(zza) need to be thoroughly examined to determine the taxability of these charges.

Issue 5: Cum Tax Benefit in Invoices
In Revenue's appeal, it challenged the extension of cum tax benefit by the adjudicating authority. The Revenue was correct in asserting that the cum tax benefit should not have been extended when the invoices did not specify the consideration received as cum-tax value. Consequently, the appeals were remanded to the adjudicating authority for a comprehensive hearing and appropriate orders to be passed in accordance with due process of justice.

Conclusion
The judgment remanded the appeals to the adjudicating authority for further proceedings, emphasizing the need for a fair hearing, examination of taxability, and adherence to legal procedures. The Court dismissed the appeals, highlighting the importance of following due process in tax classification and assessment matters.