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2024 (5) TMI 620 - AT - Service TaxShort payment of service tax - exclusion of Ocean Freight, CWC charges/CONCOR charges and CFS charges from the gross amount charged for the purpose of discharging service tax liability - pure agent services or not - suppression of facts or not - penalties - HELD THAT - The appellants have got both receipts in the freight account and also incurred expenditure under ocean freight as per their financial accounts. Claim of the appellant that they are trading in container space is found to be correct. Accordingly, on this ground alone demand of Rs. 60,56,570/- plus Rs. 21,12,773/- is set aside. It is further found that the demand of Rs. 20,32,859/- is vague in its nature as no head of service has been identified by the Revenue under which the tax is short paid. Revenue is required to identify the head of service under which tax to be demanded. As the period under dispute is prior to 01.07.2012, this demand is set aside, being vague and uncertain. There is no case of suppression, fraud or wilful mis-statement. Accordingly, penalties imposed under Section 77 and 78 are set aside. The impugned order is set aside - Appeal allowed.
Issues:
The judgment involves the following issues: 1. Determination of service tax liability on various charges billed by a Clearing and Forwarding agent. 2. Short-payment of service tax based on financial records and ST-3 returns. 3. Discrepancies in the payment of service tax for GTA services. 4. Imposition of penalties under Sections 77 and 78 of the Act. Issue 1: Determination of Service Tax Liability The Appellant, a Clearing and Forwarding agent, was found to be charging customers for various services related to export goods. While acting as a pure agent for some charges, they were deemed not to be acting as a pure agent for ocean freight charges due to adding a markup. It was concluded that service tax is payable on the ocean freight amount plus the markup. The Appellant was held liable to pay service tax of Rs. 60,56,570 based on details submitted for the period 2008-09 to 2012-13. Issue 2: Short-Payment of Service Tax Upon reconciliation of financial records with ST-3 returns, it was discovered that service tax was short-paid for the years 2008-09 to 2010-11. The total short-payment amounted to Rs. 20,32,859. The Appellant was required to discharge service tax of Rs. 5,48,770 for the period 2008-09 to 2009-10 in respect of GTA services. Issue 3: Discrepancies in GTA Services Discrepancies in the payment of service tax for GTA services were identified during a verification of the Appellant's financial records. A show cause notice was issued, proposing demands and penalties under Sections 77 and 78 of the Act. The demands were confirmed in the Order-in-Original dated 26.04.2016, along with the imposition of penalties. Issue 4: Penalties Imposed Penalties were imposed under Sections 77 and 78 of the Act based on the discrepancies in service tax payments. However, upon contest, it was found that there was no case of suppression, fraud, or wilful misstatement. Consequently, the penalties imposed were set aside. The Tribunal found that the Appellant was engaged in trading container space and not providing a service, leading to the setting aside of demands related to ocean freight charges. Additionally, the demand of Rs. 20,32,859 was deemed vague and uncertain as the head of service tax was not clearly identified. Therefore, this demand was also set aside. As there was no evidence of suppression, fraud, or wilful misstatement, the penalties imposed under Sections 77 and 78 were set aside. The appeal was allowed, and the impugned order was set aside, granting the Appellant consequential benefits as per law.
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