2012 (11) TMI 612 - AT - Service Tax

Waiver of pre-deposit - Service Tax demands - appellant was running a container freight station and was functioning as custodian of the bonded warehouses under the provisions of the Customs Act - In respect of unclear cargo, they had undertaken auction of the goods - The demand of Service Tax is on the income received from the sale of uncleared cargo after meeting the various expenses incurred under the category of Cargo Handling Services and Storage & Warehousing Services Held that - Board Circular No.11/1/2002-TRU dated 01/08/2002 has clarified that Service Tax is not leviable on the activities of the custodian where he auctions abandoned cargo and ST/VAT is paid in respect of that cargo - pre-deposit waived

Summary

Issues:
1. Confirmation of Service Tax demands and penalties by the Commissioner
2. Applicability of Service Tax on income from auction of uncleared cargo by custodians
3. Interpretation of Board Circular and Tribunal decisions

Confirmation of Service Tax demands and penalties by the Commissioner:
The appeal and stay application were filed against the Order-in-Original passed by the Commissioner of Service Tax confirming Service Tax demands of Rs. 94,02,497 and imposing penalties under Section 78 and Section 76 of the Finance Act, 1994. The Service Tax demand related to the period from October 2003 to September 2008 from the appellant, who was operating as a custodian of bonded warehouses under the Customs Act. The demand was on the income received from the sale of uncleared cargo after covering expenses under "Cargo Handling Services" and "Storage & Warehousing Services."

Applicability of Service Tax on income from auction of uncleared cargo by custodians:
The appellant's counsel relied on Board's Circular No. 11/1/2002-TRU and previous Tribunal decisions to argue that Service Tax should not be levied on custodians when auctioning abandoned cargo, especially if VAT/ST is paid for such cargo. The Tribunal had previously ruled in cases like Mysore Sales International Ltd. and India Gateway Terminal (P) Ltd. that Service Tax is not applicable to custodians conducting auctions of uncleared cargo. The revenue's representative reiterated the findings in the Order-in-Original.

Interpretation of Board Circular and Tribunal decisions:
After considering the arguments and the Board Circular along with Tribunal decisions, the Tribunal decided to waive the pre-deposit requirement and proceed with the appeal for final disposal. Citing the Board Circular and the Tribunal decisions, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief if necessary. The decision was based on the clarification that Service Tax is not applicable to custodians auctioning abandoned cargo when ST/VAT is paid for the goods, in line with the Tribunal's previous rulings.