2015 (10) TMI 1580 - AT - Service Tax

Service tax liability for auctioning of abandoned cargo Excess amount earned on auction of cargo shown in income Amount rendered is of storage and warehousing services or not? Held That - Issue is no more res integra; amount cannot be taxed under storage and warehousing service - Appeal filed by Revenue is devoid of merits - Impugned order is set aside Decision made in the case of Gateway Distri Parks Ltd. Vs. Commissioner of Central Excise, Raigad 2013 (4) TMI 739 - CESTAT MUMBAI and Central Warehousing Corporation 2015 (10) TMI 1583 - CESTAT MUMBAI followed Decision made in favour of assessee.

Summary

Issues involved:
Service Tax liability in relation to the auctioning of abandoned cargo.

Analysis:

Issue 1: Service Tax liability on excess amount recovered from cargo auction:
The main issue in this case pertains to the Service Tax liability concerning the excess amount recovered from the auctioning of abandoned cargo. The appellant was alleged to have shown the excess amount as income in their balance sheet, potentially constituting the rendering of storage and warehousing services. However, precedent cases such as Gateway Distri Parks Ltd. and Maersk India Pvt. Ltd. have established that such amounts are not taxable under storage and warehousing services. The Tribunal, relying on Board Circulars and previous decisions, concluded that Service Tax is not leviable on custodians when auctioning abandoned cargo. Consequently, the impugned order demanding Service Tax was set aside, and the appeal was allowed.

Issue 2: Applicability of High Court judgment on warehouse charges:
The appellant relied on a High Court judgment regarding the recovery of amounts through auction towards warehouse charges. However, the Tribunal found that this case law was not applicable to the present scenario concerning the liability to pay customs duty on warehouse charges recovered by the Container Freight Station (CFS).

Issue 3: Taxability of amount received by CFS on auctioned goods:
Another crucial issue was the taxability of the amount received by the Container Freight Station (CFS) on goods auctioned due to being abandoned by importers. The Revenue contended that Service Tax liability arose on this amount under the category of storage and warehousing. Nonetheless, the Tribunal, referencing previous judgments and Circulars, ruled in favor of the appellant, holding that Service Tax is not payable by custodians when auctioning and selling uncleared cargo. Consequently, the impugned order was deemed unsustainable and set aside.

In conclusion, the Tribunal rejected the Revenue's appeal, upheld the correctness and legality of the impugned order, and found it devoid of merits. The judgment provides a comprehensive analysis of the Service Tax liability issues related to the auctioning of abandoned cargo, emphasizing the settled legal position established by previous cases and Circulars.