2013 (8) TMI 172 - AT - Service Tax

Demurrage & Wharfage charges Service tax liability - Whether assesses had not paid service tax on all the amounts collected from their customers - Whether assesses were liable to pay service tax on Demurrage & Wharfage charges and the claim of the assesses that they act as pure agents can be accepted assesses had made a claim that the service tax entirety had been paid it would be adequate for the purpose of consideration of eligibility of the assesses for waiver of pre-deposit and stay - Held that - Assesses had not been able to convince that the demand was totally wrong and at the same time without considering the issue in detail in the light of statutory provisions, standard accounting principles and the difference between demurrage and wharfage and the reasons for the difference between the actual practice and the agreement and as to why the customer agreed to pay for the delay caused by the assesses. Waiver of pre deposit Stay application 30 Lakhs were ordered to be submitted on such submission stay would be allowed - assesses had paid substantial portion of the amounts and entire amount of service tax in the case of rental income and some other aspects Decided partly in favor of assesse.

Issues Involved:
1. Non-payment of service tax on collected amounts from customers.
2. Liability to pay service tax on 'Demurrage & Wharfage' charges.
3. Disputed treatment of charges collected under specific headings.
4. Non-deposit of service tax amount shown in Profit & Loss account.
5. Failure to discharge service tax on rental income.
6. Undervaluation and discrepancies in ST-3 returns.

Analysis:

1. Non-payment of Service Tax:
The appellant contested the allegation of non-payment of service tax, arguing that the service tax returns reflected the correct payments. The counsel emphasized that substantial amounts had been paid, and only specific charges remained in dispute. The Tribunal considered this argument for waiver of pre-deposit and stay against recovery.

2. Liability on 'Demurrage & Wharfage' Charges:
Regarding these charges, the appellant claimed to act as a pure agent, reimbursing the railway authorities on behalf of customers for delayed goods delivery. However, the Additional Commissioner pointed out the agreement terms indicating the appellant's responsibility for such charges. The Tribunal noted discrepancies in accounting treatment and the need for detailed examination based on statutory provisions and accounting principles.

3. Treatment of Specific Charges:
The issue of charges collected under headings like local transportation and freight was disputed. The absence of clear terms for customer-requested transportation raised concerns about service tax liability on these amounts, requiring further scrutiny.

4. Non-deposit of Service Tax Amount:
Specific instances of non-depositing service tax amounts from Profit & Loss accounts during 2006-07 and 2007-08 were highlighted, leading to demands and penalties.

5. Failure to Discharge Rental Income Service Tax:
The appellant faced allegations of not paying service tax on rental income under 'Renting of Immovable Property service,' necessitating a review of the compliance status.

6. Undervaluation and ST-3 Return Discrepancies:
The issue of undervaluation and discrepancies in ST-3 returns was raised, indicating potential inaccuracies in reporting service values, warranting a closer examination of the financial records.

In conclusion, the Tribunal directed the appellant to make a pre-deposit of a specified amount within a deadline to consider waiver of further dues and grant a stay against recovery pending the appeal process. The decision highlighted the need for detailed investigations into the disputed charges, compliance issues, and accounting discrepancies to ascertain the correct service tax liabilities.

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