2023 (3) TMI 444 - AT - Service Tax

Classification of services - Cargo Handling Service - Clearing and Forwarding Agency Service - Stevedoring Service - Customs House Agency Service - value of the services calculated separately under the appropriate categories for levy of duty - services rendered on a turnkey basis under the CHA category - Show Cause Notice issued was time-barred under the normal time period - allegation of suppression of fact etc. for issue the Show Cause Notice under the extended time limit - liability to pay interest and penalties. HELD THAT - The clarification in C.B.E.C. vide circular F. No. B43/1/97-TRU dated 06/06/1997 with reference to the CHA service covers a gamut of service activity which could when rendered individually be covered under other specific service categories. However, when the whole range of activity is performed by a CHA in relation to the entry or departure of conveyance or the import or export of goods, it will be covered under CHA Service and Service Tax is to be computed only on the gross service charges, by whatever head / nomenclature billed by the CHA to his client. This clarification is squarely applicable in the case of the CHA services provided by ASPIN to their clients, in relation to the entry or departure of conveyances or the import or export of goods. The services rendered by ASPIN on turnkey basis during the period under appeal would fall under the category of CHA Services and the value of taxable service has to be computed in the manner stated at paragraph 2.5 of the C.B.E.C. Circular dated 06.06.1997 above. Having decided the matter of classification and valuation on merits in favour of the appellant, the issues relating to interest and fines do not survive - Appeal allowed.

Summary

Issues:
1. Classification of services provided by the appellant under different categories for levy of duty.
2. Time-barred Show Cause Notice issuance and allegation of suppression of facts.
3. Liability of the appellant to pay interest and penalties as ordered.

Classification of Services:
The appeal involved determining whether the services provided by the appellant should be classified separately under various categories like 'Cargo Handling Service', 'Clearing and Forwarding Agency Service', 'Stevedoring Service', and 'Customs House Agency Service', or if they could be classified solely under the 'Customs House Agency Service'. The appellant argued that their services fell under the CHA category, citing a CBEC Circular that specified the value of taxable service for CHA services provided on a turnkey basis. The Tribunal analyzed the Circular and previous judgments related to the appellant's case in Cochin and Mangalore, which upheld the classification of services under CHA Services. The Tribunal held that the services rendered by the appellant on a turnkey basis fell under CHA Services, and the value of taxable service should be computed as per the Circular.

Time-barred Show Cause Notice and Suppression of Facts:
The appellant contended that the Show Cause Notice issued after a lapse of one year was time-barred as there was no fraud or willful misstatement on their part, and they had been regularly filing returns. The Revenue argued that the appellant had suppressed taxable value by maintaining separate accounts and had not paid service tax on a lump sum amount for services other than those on a turnkey basis. The Tribunal examined the issue and found that the Circular applicable during the relevant period covered by the Show Cause Notice clarified the taxable services provided by a CHA. The Tribunal concluded that the Show Cause Notice was not time-barred and suppression of value and improper classification of services warranted the duty, interest, and penalties imposed in the impugned order.

Liability for Interest and Penalties:
After deciding the classification and valuation of services in favor of the appellant, the Tribunal ruled that the issues regarding interest and penalties were no longer relevant. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief as per the law.

The judgment by the Appellate Tribunal CESTAT Chennai addressed the classification of services provided by the appellant, the time-barred Show Cause Notice issuance, and the liability of the appellant for interest and penalties. The Tribunal upheld the classification of services under the Customs House Agency Service category based on relevant CBEC Circulars and previous judgments. It found that the Show Cause Notice was not time-barred and that the appellant had suppressed taxable value, justifying the duty, interest, and penalties imposed. Ultimately, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.