2009 (6) TMI 405 - AT - Service Tax

Demand was confirmed on the ground that Applicant is liable to pay Service Tax on the gross amount received as provider of clearing and forwarding agent. - The contention of Applicant is that they are liable to pay Service Tax only on remuneration received and amount which is reimbursed by the principal are not to be taken into consideration for the purpose of levy of Service Tax as C & F Agent. - In the agreement there is specific Clause that the present Applicants are not entitled for any reimbursement or any monetary benefit for the work rendered under the agreement. - Prima facie we are of the view that the decisions relied upon by the Applicants are not applicable to the facts of the present case in view of the specific Clause in the agreement. Further we find that in the monthly returns the receipt of reimbursements is not reflected by the Applicant therefore prima fade we find it is not a case for total waiver of the amount of Service Tax.

Summary

Issues:
1. Liability to pay Service Tax on gross amount received as a clearing and forwarding agent.
2. Interpretation of the agreement regarding reimbursement and monetary benefits.
3. Time-barred demand for Service Tax.
4. Financial hardship claimed by the Applicant.

Analysis:
1. The Applicant filed for waiver of pre-deposit of a substantial amount of Service Tax and penalties. The demand was based on the contention that the Applicant is liable to pay Service Tax on the gross amount received as a provider of clearing and forwarding agent. The Applicant argued that Service Tax should only apply to remuneration received, excluding amounts reimbursed by the principal. They cited previous Tribunal decisions to support their position. However, the Tribunal found that the agreement specifically stated that the Applicant was not entitled to any reimbursement or monetary benefit for the work rendered, making the previous decisions cited by the Applicant inapplicable.

2. The Departmental Representative for the Revenue highlighted Clause 13 of the Agreement, which negated any entitlement to reimbursement or monetary benefits for services rendered. The Revenue contended that the Applicant had not disclosed abatement or reimbursement in their filed returns, undermining the Applicant's claim that the Revenue was aware of the situation. The Tribunal, considering the specific Clause in the agreement and the lack of reflection of reimbursements in the monthly returns, concluded that the decisions cited by the Applicant did not apply. Consequently, the Tribunal directed the Applicant to deposit 50% of the tax amount within eight weeks due to the lack of a case for total waiver, while waiving the remaining amount of Service Tax and penalties, with recovery stayed.

3. The Applicant also argued that the demand was time-barred, citing the issuance of the show cause notice in 2007 for Service Tax for the period from October 2001 to March 2005. The Applicant claimed regular registration as a provider of C & F Service, filing returns regarding remuneration received, and paying taxes during the period in question. Additionally, the Applicant pleaded financial hardship, which was considered by the Tribunal in its decision to grant partial waiver and stay recovery.

4. The Tribunal's decision required compliance by a specified date to ascertain the deposition of the directed tax amount. The judgment was pronounced and dictated in an open court setting, with the details of the decision recorded for further action by the parties involved.