2019 (5) TMI 1237 - AT - Service Tax

Non-payment of service tax - Steamer Agent Service - period April 2001 to December 2005 - Review order under Section 84 of the Finance Act 1994 - Revenue sharing basis - HELD THAT - There is no mention of the activity of booking of space by the appellant and sharing of profit for that purpose. The tenor of the agreement is on the lines of sharing of information and providing documents. Provision of documents as mentioned above is incidental to the Cargo Agent Service to shipping lines - we find force in the argument of learned AR that the services rendered by the appellant are directly or indirectly to a shipping line. Alternate claim of the appellants is that the amounts were received by them in foreign exchange and for that reason the same are not taxable - HELD THAT - There is some force in the argument. However as submitted by the learned AR the appellants did not produce any evidence to the effect that they receive the remuneration in foreign exchange and that the same was not repatriated - matter may be remanded to the original authority to verify from the books of accounts and the evidence to be submitted by the appellants to decide so as to the eligibility of the appellants. Appeal allowed by way of remand.

Summary

Issues: Allegation of non-payment of service tax on Steamer Agent Service; Review of order under Section 84 of Finance Act 1994; Classification of services rendered by the appellant; Receipt of payment in foreign currency and tax liability.

Allegation of non-payment of service tax on Steamer Agent Service:
The appellants were accused of not paying service tax on Steamer Agent Service during a specific period. A show-cause notice was issued, dropped, and then reviewed under Section 84 of the Finance Act 1994. The Commissioner passed a fresh adjudicating order leading to the appeal.

Classification of services rendered by the appellant:
The appellant argued that they were engaged in freight forwarding, not acting as agents for their trade partners. They contended that the contracts were for profit-sharing related to cargo space booking, not services to a shipping line. The appellant cited previous decisions and the nature of their agreements to support their claim.

Review of order under Section 84 of Finance Act 1994:
The Department argued that the appellant's activities fell under the definition of 'Steamer Agent Service' as per Section 65(105)(i) of the Finance Act 1994. They emphasized that the overseas partners' lack of ship ownership did not exempt the appellant from service tax liability.

Receipt of payment in foreign currency and tax liability:
Regarding the receipt of foreign exchange, the appellant claimed exemption from service tax. However, they failed to provide evidence supporting this claim. The Tribunal found merit in this argument but decided to remand the case to the original authority for verification and proper quantification of tax liability.

This detailed analysis covers the issues involved in the legal judgment, highlighting the arguments presented by both parties and the Tribunal's decision to remand the case for further verification.