2018 (1) TMI 428 - AT - Service Tax

Short payment of service tax - CHA service - Business Auxiliary services - Held that - the SCN itself gives the break-up of the charges collected, such as wharfage charge, CHA, transportation and other expenses. This being so, the contention of the ld. AR that respondent has to pay service tax on 15% of the lump sum amount is not acceptable - the Commissioner has dealt in detail the break-up of the charges as well as the amount paid to RSPL by respondents out of the amount received from M/s.NPCIL. Thus, he has found that the differential taxable value would be only ₹ 0.2 per MT - demand upheld. Services rendered to FHB under BAS - Held that - on verification, it was revealed that respondents had entered into agreement with FHB to act as agent of FHB for handling and distribution of a portion or all the contents of a consolidated shipment for delivery or re-consignment. Respondents have agreed to provide all such services on behalf of FHB in respect of cargo as are normally rendered by break bulk agents. Therefore the charges received by respondent for such activities from NPCIL are actually on behalf of FHB. In such circumstances, the observation of the Commissioner that the respondents have not rendered services for and on behalf of FHB does not appear to be in consonance with law - for the limited purpose of verifying and reconsidering the demand of service tax in respect of Annexure III (BAS), the matter requires to be remanded to the adjudicating authority - matter on remand. Partly decided against Revenue and part matter on remand.

Summary

Issues:
1. Short payment of service tax under CHA services and Business Auxiliary Service.
2. Interpretation of agreements with consortium members.
3. Applicability of service tax guidelines and export of services criteria.
4. Discrepancies in service tax demand and rendered services under BAS.

Analysis:

1. The case involved a dispute regarding the short payment of service tax under CHA services and Business Auxiliary Service. The respondent had formed a consortium with other companies for clearing imported cargo. The department alleged that the respondent short-paid service tax under CHA services and BAS. The original authority partly confirmed the demand, leading to the department appealing before the Tribunal.

2. The department argued that the respondent should pay service tax based on the lump sum amount received, as per CBEC guidelines. They contended that the respondent short-paid service tax on CHA services, emphasizing the rates mentioned in the work order. The Commissioner observed that the respondent should pay tax on the differential taxable value. The Tribunal upheld the demand regarding CHA services.

3. Regarding the demand under BAS, the department claimed that the services rendered by the respondent to FHB did not qualify as export of services. The respondent argued that the services were indeed export of services as they were provided to FHB located outside India and consideration was received in foreign exchange. The Tribunal remanded this issue for further verification.

4. The Tribunal held that the demand in respect of Annexures 2 and 4 should not have been set aside, as the respondent had already discharged the service tax liability. Regarding Annexure 1, the Tribunal found that the respondent had correctly discharged the service tax based on the agreement's break-up of charges. However, the issue related to Annexure 3 was remanded to the adjudicating authority for further verification on whether the services qualified as export of services.

In conclusion, the Tribunal partly allowed the appeal, setting aside the dropping of demand in certain annexures, upholding the demand in others, and remanding one issue for further consideration.