2024 (5) TMI 994 - AT - Service Tax

Service tax liability on the amount retained by the appellant from the sale proceeds of unclaimed imported goods - consideration for providing service or not - storage and warehousing services - service tax paid under protest for the period February 2004 to 17.07.2008 - appellant is operator of container freight station and custodian of goods - Applicability of precedent decision of this Tribunal in appellant s own case ALL CARGO GLOBAL LOGISTICS LTD. VERSUS CCE RAGIAD AND VICE VERSA 2015 (10) TMI 2216 - CESTAT MUMBAI - HELD THAT - On going through the precedent decision of this Tribunal in appellant s own case it is very clear that the said decision is in favour of the appellant and exactly on the same issue for earlier period. Judicial proprietary and decorum requires that coordinate Bench must follow precedent decision passed by another Bench of this Tribunal but there comes little bit reluctance in completely following the said decision in which distinction between charges received towards storage and warehousing and balance of auction proceeds of abandoned goods is not forthcoming and also there is change of law post 2011 effected through introduction of negative list for the part period coupled with insertion of proviso to section 150 (2) of the Customs Act with effect from 08.04.2011. To start with it has be to placed on record that Appellant was paying service tax under protest after being summoned by the Superintendent (preventive) Central Excise Raigad as could be inferred from the covering letter of the Appellant dated 10.11.2006 17.07.2008 08.08.2008 and 13.10.2008 annexed to the appeal memo from page no. 16 onwards. Appellant had paid service tax under protest for the period February 2004 to 17.07.2008 but such protest was with regard to auction surplus of abandoned cargo in which service tax was stated to be not payable since no service was provided to any person by the Appellant. This stand might have been taken by the Appellant by following the Board circular of 2002 but taking note of the said circular this Tribunal vide its order passed in 2015 for the period of 2009 allowed the appeal of the Appellant only to the extent of surplus lying in their account from auction sale proceeds. Appellant also had relied on the decision of this Tribunal passed in the case of M/S. TRANSINDIA LOGISTICS PARK VERSUS COMMISSIONER OF SERVICE TAX RAIGAD 2016 (5) TMI 135 - CESTAT MUMBAI and pleaded the same in its written note of the argument as a decision passed in its favour without any reference as to if the present Appellant and the said Trans India Logistics Park Limited are one and same or sister concern of each other but the said order was passed in respect of availment of CENVAT credit on certain services which were exclusively used for auction of abandoned goods that was held to be inadmissible by the Adjudicating Authority by holding such auction sale as trading activity - Placing reliance on this decision the Appellant could no absolved its liability for the reason that trading is a sale of goods which is outside the purview of the service tax in view of operation of Article 366 (29A) of the Constitution of India but as observed above activity of trading is not the purpose of the entire process of auction when the same is meant to discharge the liability including liability that had arisen from availment of services of custodian of goods etc. in terms of section 150 of the Customs Act. Change of law occurred both in service tax laws after introduction of negative list by broadening the horizon of service tax network and also by amending section 150 of the Customs Act in making deposit of surplus money retained by the auctioneer with the Government within six months if the importer did not come for want to receive the same. With protest upto the year 2008 and without protest thereafter Appellant had discharged its service tax liability in respect of storage and warehousing services upto the present dispute that arose from April 2011. It is therefore not understood as to why Appellant has change its stand in not making payment of service tax against receipt of the amount towards storage and warehousing services rendered by it and clubbing both the amount of these services as well as surplus that was retained on behalf of the exporter and showing the same as non-taxable income in its account statement and therefore the Appellant is liable to pay service tax on storage and warehousing services for the period under dispute and it would not suffer any loss on that account as the entire amount retained by him would otherwise go back to the Government treasury in view of the operation of section 150 clause 2(e) read with its proviso. Therefore no irregularity is noticeable in the order passed by the Commissioner of Service Tax-IV Mumbai who also has followed this Tribunal s order passed in 2015 for the earlier period - appeal dismissed.

Summary

Issues Involved:

1. Whether the amount retained by the appellant from the sale proceeds of unclaimed imported goods is liable to service tax.
2. Applicability of precedent decisions and CBEC Circulars on the issue.
3. Distinction between charges received towards 'storage and warehousing' and "balance of auction proceeds of abandoned goods".
4. Impact of changes in law post-2011, including the introduction of the negative list and amendments to Section 150 of the Customs Act.

Summary:

1. Service Tax Liability on Retained Amount:
The appellant, a custodian of imported goods, retained amounts from auction proceeds of unclaimed goods. The Revenue argued that this retained amount is consideration for providing service and raised service tax demands for the periods 2012-13 and 2013-14. The appellant contended that the proceeds were from the sale of goods on which VAT was paid and thus not subject to service tax. The Tribunal examined the applicability of service tax on the retained amount.

2. Precedent Decisions and CBEC Circulars:
The appellant relied on previous Tribunal decisions and CBEC Circular F.No. B11/1/2002-TRU dated 01.08.2022, which clarified that service tax is not leviable in such circumstances. The original authority, however, did not accept these arguments and confirmed the service tax demands. The Tribunal noted that judicial propriety requires following precedent decisions but expressed reluctance due to distinctions in the present case and changes in law post-2011.

3. Distinction Between Charges:
The Tribunal highlighted the need to distinguish between charges received for 'storage and warehousing' and the "balance of auction proceeds of abandoned goods." The previous Tribunal decision did not clearly address this distinction. The Tribunal observed that the appellant had paid service tax on 'storage and warehousing services' but not on the surplus auction proceeds, which was retained for the importer.

4. Changes in Law Post-2011:
The Tribunal noted significant changes in law, including the introduction of the negative list and amendments to Section 150 of the Customs Act, which affected the treatment of surplus auction proceeds. The Tribunal emphasized that the surplus amount retained by the appellant should be paid to the government if not claimed by the importer within six months, as per the amended Section 150(2) of the Customs Act.

Conclusion:
The Tribunal concluded that the appellant is liable to pay service tax on 'storage and warehousing services' for the disputed period. The order passed by the Commissioner of Service Tax-IV, Mumbai, confirming the service tax demands, was upheld. The appeal was dismissed.

Order:
The appeal is dismissed, and the order passed by the Commissioner vide Order-in-Original No. 89-90/STCIV/MRRR/15-16 dated 21.03.2016 is hereby confirmed. (Order pronounced in the open court on 17.05.2024)