2019 (9) TMI 1217 - AT - Service Tax

Classification of services - port services or not - providing Stevedoring Services which include the work of unlashing / lashing of containers in vessels for discharge of import and export containers - extended period of limitation - HELD THAT - Larger Bench in the case of WESTERN AGENCIES PVT. LTD. VERSUS CCE 2011 (3) TMI 528 - CESTAT, CHENNAI (LB) it was held that the service provided in any manner serves the purpose of serving the clients of stevedore in relation to goods or services indirectly through stevedores. Therefore, the service provided by stevedores fall under the class of port service and taxable - thus, the services rendered by the appellant fall under Port Services . Extended period of limitation - period involved is 16/07/2001 to 31/12/2005 whereas SCN was issued on 11.10.2006 - HELD THAT - It cannot be alleged that there was suppression of facts with an intent to evade payment of duty on the part of the appellant - as mens rea is not established, penalties are liable to be set aside - the matter requires to be remanded to the Original Authority for computing the duty demand for normal period. The appeal is allowed partly and remanded to the original authority for computation of duty demand for normal period - penalties set aside.

Summary

Issues:
Interpretation of law regarding whether services provided can be considered as 'Port Services' - Whether extended period can be invoked for demand - Whether penalties under Sections 76, 77, and 78 of the Finance Act, 1994 are justified.

Analysis:
1. Interpretation of Law - 'Port Services': The appellant, engaged in providing Stevedoring Services, argued that their services do not qualify as 'Port Services' as they are limited to unlashing/lashing containers in vessels without undertaking other port-related activities. They highlighted various judicial decisions supporting their stance. The Department contended that services provided fall under 'Port Services' as per a Circular and cited relevant case laws. The Tribunal analyzed the definition of 'Port Services' under Section 2(82) of the Finance Act, 1994, and the CBEC Circular, concluding that the services rendered by the appellant indeed fall under 'Port Services' based on a broader interpretation.

2. Extended Period for Demand: The appellant argued that the demand for a portion of the period was barred by limitation, citing lack of reasons for invoking the extended period in the show-cause notice. The Tribunal noted that the confusion in interpreting the taxable service led to the CBEC issuing a clarification, indicating no intent to evade payment of duty. Consequently, the Tribunal held that a major portion of the demand was time-barred and restricted the demand to the normal period, setting aside penalties due to the absence of mens rea.

3. Penalties under Sections 76, 77, 78: The Tribunal, considering the absence of intent to evade payment of duty, set aside the penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994. The matter was remanded to the Original Authority for computing the duty demand for the normal period, with penalties being overturned.

In conclusion, the Tribunal partially allowed the appeal, remanding the case for the computation of duty demand for the normal period while setting aside the penalties imposed. The decision was pronounced in open court on 27/09/2019.