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2024 (7) TMI 107 - AT - Service TaxClassification of service - Cargo Handling Services or Port Services - handling of Sulphuric Acid - extended period of limitation - HELD THAT - From the cogent reading of the meaning of the service pre post of 01.07.2012 important ingredients is that if any activity provided by one person to another but only for the considering the said activity will amount to service and then only service tax can be charged on such consideration. In absence of any consideration, fact in the present case, no service tax can be charged on a national value assumption by the Department. This issue has been considered by this Tribunal in the case of Commissioner of CGST and Central Excise vs. Edelweiss Financial Services Ltd. 2022 (2) TMI 1359 - CESTAT MUMBAI which was upheld by the Apex Court 2023 (4) TMI 170 - SC ORDER , where it was held that ' The reliance placed by Learned Authorised Representative on the 'non-monetary benefits' which may, if at all, be of relevance for determination of assessable value under section 67 of Finance Act, 1994 does not extend to ascertainment of 'service' as defined in section 65B(44) of Finance Act, 1994. 'Consideration' is the recompense for the 'contractual' undertaking that authorizes levy while 'assessable value' is a determination for computing the measure of the levy and the latter must follow the former.' In the present case admittedly neither any service was provided by the appellant to the HIL nor any consideration was received. Therefore accordingly the ingredients of Section 66 and 67 of the Finance Act, 1994 are not available for charging service tax. The appellant has also relied upon on larger bench judgment of this tribunal as in the case of Commissioner of Service Tax Vs. Bhayana Builders P Ltd. 2018 (2) TMI 1325 - SUPREME COURT as per which was upheld by the Supreme Court wherein the relevant para of the said decision from the above judgment also settled that when involvement of any considering the service tax cannot be charged. Since no consideration is involved in the present case, the Service Tax demand on the notional will not sustain - the impugned order set aside - appeal allowed.
Issues Involved:
1. Whether the appellant was liable to pay service tax on Cargo Handling Charges for the export of Sulphuric Acid. 2. Whether the valuation adopted by the Department was correct. 3. Whether the demand was time-barred due to the extended period invoked by the Department. Issue-Wise Detailed Analysis: 1. Liability to Pay Service Tax on Cargo Handling Charges: The appellant was engaged in providing various services including port services, cargo handling services, and storage & warehousing services. For the export of Sulphuric Acid, the appellant had stopped charging Cargo Handling Charges of Rs. 50 per MT from M/s. Hindalco Industries Limited (HIL) post 01.03.2006 due to a mutual agreement. The reason was that HIL had installed a pipeline for handling Sulphuric Acid, and the appellant's involvement was minimal. The Central Excise Department, during audits, observed that the appellant was not collecting these charges, leading to the issuance of show cause notices alleging additional consideration in the hands of the appellant. The appellant argued that no service was provided, and hence no consideration was involved. They relied on several judgments, including Commissioner of CGST and Central Excise vs. Edelweiss Financial Services Ltd., where the Supreme Court upheld that in the absence of consideration, no service tax could be demanded. The Tribunal agreed, stating that an activity must involve consideration to be taxable, as per Section 65B(44) of the Finance Act, 1994. 2. Correctness of Valuation Adopted by the Department: The appellant contended that the valuation adopted by the Department was incorrect and that Rule 3 of the Service Tax (Determination of Value) Rules, 2006, was not applicable. They cited the Tribunal's judgment in CCE vs. Essar Bulk Terminal Ltd. and argued that the demand under 'Cargo Handling Services' was unsustainable as the service should be classified under 'Port Services'. The Tribunal noted that the value of taxable services should be the gross amount charged, as per Section 67 of the Finance Act, 1994. Since no service was provided and no amount was charged, the valuation adopted by the Department was incorrect. 3. Time-Barred Demand: The appellant argued that the demand was time-barred as the first audit was conducted in 2011, but the show cause notices were issued much later, invoking the extended period. The Tribunal did not specifically address this issue in detail but focused on the absence of consideration, which rendered the demand unsustainable. Conclusion: The Tribunal concluded that since no service was provided and no consideration was received, the necessary conditions under Sections 66 and 67 of the Finance Act, 1994, for charging service tax were not fulfilled. The impugned orders were set aside, and the appeal was allowed with consequential relief. The Tribunal relied on several judgments, including Commissioner of Service Tax vs. Bhayana Builders P Ltd. and Murli Realtors Pvt Ltd vs. CCE, Pune-II, to support their decision that service tax cannot be charged in the absence of consideration. Pronouncement: The judgment was pronounced in the open court on 01.07.2024.
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