2019 (2) TMI 1108 - AT - Service Tax

Maintenance and Repair Services on containers - demand of service tax - Held that - Merely because the assessee has outsourced the activity of washing and repair of containers to another, it cannot be said that they have not provided any services. The document issued by the assessee to the customer shows that the bills are raised for washing and repairing of containers. The assessee is liable to pay service tax under this category. However, from the document, it appears that the assessee has billed a consolidated sum to the customer, which includes material costs as well as taxes paid by the contractor. The quantification of demand under this category is therefore incorrect and requires to be revised. For the limited purpose of requantification, the matter is remanded to the adjudicating authority - no penalty is imposable in respect of any final tax liability that may be arrived on this score. Storage and Warehousing Services - Held that - The assessee has conceded that they are liable to pay service tax under Storage and Warehousing Services. The demand under this category is therefore upheld. Demand of ₹ 33,28,912/- under the category of reimbursable expenses - Held that - An amount of ₹ 1,13,954/- has been confirmed under this category. Ld. Counsel has submitted that the assessee is not contesting the amount confirmed under this category and therefore, the same is upheld. Composite Penalty u/s 78 - Held that - The assessee has put forward reasonable cause for non-payment of service tax under this category and therefore, the penalty under Section 78 requires to be set aside by invoking Section 80 of the Finance Act, 1994. Appeal allowed in part.

Issues involved:
1. Demand of service tax on Maintenance and Repair Services
2. Demand of service tax on Storage and Warehousing Services
3. Demand of service tax on reimbursable expenses
4. Imposition of penalties

Issue 1: Demand of service tax on Maintenance and Repair Services:
The assessee engaged contractors for Maintenance and Repair work of containers and argued that they are not liable to pay service tax as the contractors have already paid service tax on the labor cost. The Tribunal held that the assessee is liable to pay service tax as they outsourced the work to contractors and billed customers for the service. However, the quantification of demand was deemed incorrect, and the matter was remanded for revision. The penalty was not imposed due to a misinterpretation of the law by the assessee.

Issue 2: Demand of service tax on Storage and Warehousing Services:
The assessee accepted liability for service tax under this category, and the demand was upheld by the Tribunal. However, the penalty imposed was set aside.

Issue 3: Demand of service tax on reimbursable expenses:
The Tribunal confirmed a demand of &8377; 1,13,954 under this category, which the assessee did not contest. The demand of &8377; 33,28,912 was dropped, and the Tribunal dismissed the Department's appeal against this decision. The penalty imposed on this issue was set aside due to the long-standing interpretational issue.

Issue 4: Imposition of penalties:
The Tribunal set aside the penalty imposed under Section 78 for various services, considering the interpretational nature of the issue regarding reimbursable expenses. The penalty under Section 78 was revoked by invoking Section 80 of the Finance Act, 1994, based on the reasonable cause presented by the assessee for non-payment of service tax under the Storage and Warehousing Services category.

In conclusion, the Tribunal partly allowed the assessee's appeal, upheld the demand of service tax on certain categories, remanded the demand for Maintenance and Repair Services for reconsideration, and dismissed the Department's appeal. The penalties were set aside or revoked based on the circumstances of each issue.

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