2013 (2) TMI 434 - Commissioner - Service Tax

Storage and Warehousing service Whether the appellant is liable to pay Service tax under storage and warehousing service Appellant have earned Auction Income realized from the auction proceeds of the abandoned cargo by the importers. auction income is retained by the appellant in lieu of the storage and warehousing charges due from the importer Held that - A clarification has been sought as to whether Service tax is payable on abandoned cargo which are auctioned by the CFS as no service is rendered to any person. In the case of auctioned goods, the proceeds of the auction goes first to the cost of auction, then towards customs duties and then to the custodian of the goods. It is clarified that no cargo handling service can be said to have been rendered in such cases, therefore Service tax is not leviable It is pertinent to note here that when the Board had issued this clarification for Cargo Handling Service , the service of Storage and Warehouse was not brought under Service tax net. Board s said clarification on cargo handling service would equally apply to storage and warehousing service by inference. Even though the appellant is the custodian of the goods and not the owner, still transfer to title of the goods takes place during the auction and hence it is to be treated as a sale. The fact of sale is also evident from the sales tax having been paid by the successful bidder. Thus, when the transaction is one of sale and not a service, the question of payment of Service tax will never arise Therefor appellant need not to pay any Service tax In favour of assessee. Extended period of limitation - Whether the extended period can be invoked - Held that - Auction income has been duly and fully reflected in the appellants books of accounts and that there has been no intention whatsoever on the part of the appellants to hide the auction income from the knowledge of the department. Further it is also not the case of department that the auction income has not been reflected in their regular books of accounts so as to invoke extended time limit. This has also been decided in CCE v. H.M.M. Ltd. 1995 (1) TMI 70 - SUPREME COURT OF INDIA ). Therefore extended period of limitation cannot be invoked in the instant case In favour of assessee.

Summary

Issues:
1. Invocation of extended period for demand of Service tax.
2. Liability of the appellant to pay Service tax under 'storage and warehousing service'.

Extended period for demand of Service tax:
The judgment addressed the issue of invoking the extended period of limitation for demanding Service tax. It was noted that the extended period was invoked because the "auction income" was not reflected in the relevant ST-3 returns. However, the absence of wilful suppression of facts to evade tax payment was highlighted. The appellant had fully disclosed the "auction income" in their books of accounts, which were public documents. The judgment cited the case of CCE v. H.M.M. Ltd. to support the argument that the extended period cannot be invoked based on these grounds. It was concluded that the extended period of limitation could not be applied in this case, limiting the demand to one year from the relevant date.

Liability to pay Service tax under 'storage and warehousing service':
Regarding the liability of the appellant to pay Service tax under 'storage and warehousing service', the judgment analyzed the arguments presented. The appellant contended that no Service tax was payable as there was no clear service provider-service receiver relationship. The judgment agreed with this argument, emphasizing that without a service receiver, the question of Service tax payment does not arise. The appellant also relied on a Board Circular stating that Service tax is not leviable on auctioned goods where no service is rendered. The judgment inferred that this clarification on 'cargo handling service' applied to 'storage and warehousing service' as well. It was further highlighted that the transaction during the auction was considered a sale, not a service, as evidenced by the payment of sales tax by the successful bidder. The judgment concluded that the auction income did not represent storage and warehousing charges, and hence, the appellant was not liable to pay Service tax on it. Consequently, the impugned order was set aside, and the appeal was allowed.

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