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2022 (2) TMI 666 - AT - Service TaxLevy of service tax - Business Auxiliary Service - Business Support Service - Cargo Handling Service - Transport of Goods by Road Service - reimbursable expenses - HELD THAT - The impugned order cannot be sustained. Further in absence of any breakup of the differential income shown in the book of accounts, we are also not in position to determine whether any portion/ part of the differential income would be attributable to any service provided under the taxable category being provided by the appellant. However it is observed that the those portion of incomes which are held to be non taxable/ exempted and the reimbursable expenses cannot be subjected to any service tax, in the manner as has been proposed in the impugned order to 01.07.2012 when the service tax was levied by defining the category of taxable services. The matter needs to be remanded back to the original authority, for redetermination of amount that can be subjected to service tax on the basis of the information that needs to be provided by the appellant in respect of the breakup of differential income between their financial records and ST-3 returns - Appeal allowed by way of remand.
Issues Involved:
1. Confirmation of Service Tax demand. 2. Payment/recovery of interest on Service Tax. 3. Imposition of penalties under Sections 76 and 77 of the Finance Act, 1994. 4. Classification and taxability of services provided. 5. Reimbursable expenses and their taxability. Issue-wise Detailed Analysis: 1. Confirmation of Service Tax Demand: The Commissioner confirmed the demand of Service Tax amounting to ?12,72,72,085/- for the period October 2009 to September 2010 and ?12,11,00,548/- for the period October 2010 to September 2011 under Section 73(2) of the Finance Act, 1994. The appellant was found to have additional income under 'operating income' not declared in ST-3 returns. The Commissioner treated the entire differential income as taxable under Business Support Services due to non-cooperation from the appellant in providing a detailed breakup of this income. 2. Payment/Recovery of Interest on Service Tax: The Commissioner ordered the payment/recovery of interest at the appropriate rate under Section 75 of the Finance Act, 1994, on the demanded Service Tax amounts from the due date of payment till the actual payment date. 3. Imposition of Penalties under Sections 76 and 77 of the Finance Act, 1994: Penalties were imposed under Section 76 for non-payment of Service Tax, amounting to ?1,27,27,209/- and ?1,71,10,055/- respectively for the two periods, with a provision for reduction to 25% if paid within 30 days. Additionally, penalties under Section 77 were imposed for ?5,000/- or ?200 per day of continued failure, whichever is higher. 4. Classification and Taxability of Services Provided: The appellant provided services related to export and import cargo, registered under multiple service categories. The Commissioner held that the differential income should be treated as income from taxable services, citing the appellant’s failure to provide a detailed breakup. The tribunal noted that the appellant was engaged in freight forwarding as a Multi Modal Transport Operator (MTO), issuing house bills of lading and earning margin income from freight, which was not classified properly in the SCNs. 5. Reimbursable Expenses and Their Taxability: The tribunal referred to various judgments, including the Hon’ble Apex Court's decision in Intercontinental Consultants and Technocrats Pvt Ltd, which settled that reimbursable expenses for the period in dispute are not taxable. The tribunal emphasized that portions of income held non-taxable or exempted and reimbursable expenses cannot be subjected to Service Tax as proposed. Conclusion and Remand: The tribunal set aside the impugned order, noting the need for a detailed breakup of the differential income to determine the taxable amount accurately. The matter was remanded back to the original authority for redetermination based on the information to be provided by the appellant. The appellant was instructed to cooperate by providing the necessary details. The adjudicating authority was directed to dispose of the matter within three months of receiving the order. The cross objections filed by the Revenue were also disposed of.
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