2010 (3) TMI 398 - AT - Service Tax

Stay-Pre-dispensation- The assessee s contention is that they are not getting any commission directly from the Shipping Line as Steamer Agents hence they are not liable for Service Tax. Held that- There is no finding of mala fide in the assessee not paying the tax on their own. The appellant is registered with the department as a provider of services under storage and warehousing and cargo handling . No irregularity is recorded to have been noticed in the conduct of the assessee. These circumstances apparently warrant waiver of penalty u/s 78 of the Act.

Summary

Issues:
Demand of service tax under Steamer Agents Service (SAS), waiver of pre-deposit and stay of recovery of dues, interpretation of the definition of Steamer Agent under the Finance Act 1994, liability of the appellant for service tax, imposition of penalty under Section 78 of the Act.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Bangalore involved a case where the impugned order demanded service tax, interest, and penalty from the appellants under the category of Steamer Agents Service (SAS) for services rendered during a specific period. The appellants sought waiver of pre-deposit and stay of recovery of the dues through a stay application. The main issue revolved around whether the activities undertaken by the appellants fell under the definition of Steamer Agent service as per the Finance Act 1994.

The original authority had initially dropped the proposal to demand tax from the appellants and to penalize them. However, the Commissioner, in the impugned order, confirmed the demand of service tax and imposed a penalty after considering the contentions of the assessee and the definitions provided in the Finance Act 1994. The Commissioner found that the services rendered by the appellants to the shipping companies abroad indeed fell under the ambit of Steamer Agent service, as per the agreements and definitions outlined in the Act.

Upon hearing both sides, the Tribunal observed that the appellants had indeed provided a service falling under SAS to the shipping lines by booking cargo space on vessels and earning a margin from the shipping lines. The Tribunal noted that the appellants earned a commission shared with their trading partners, which constituted the commission earned by the steamer agents, including the appellants. Consequently, the Tribunal held that the appellants were prima facie liable to pay tax on the commission received for the services provided under SAS.

The Tribunal directed the appellant to deposit the entire service tax amount within a specified period and subject to compliance, waived the pre-deposit of the balance dues confirmed in the impugned order and stayed the recovery thereof until the disposal of the appeal. The Tribunal also noted that there was no finding of mala fide in the appellant's non-payment of tax and that the circumstances warranted the waiver of penalty under Section 78 of the Act.

In conclusion, the judgment analyzed the definitions and agreements involved to determine the liability of the appellants for service tax under the Steamer Agents Service category, ultimately directing the appellant to comply with the deposit requirements while waiving the penalty under the Act.