2016 (4) TMI 498 - AT - Service Tax

Demand - Transport coordination Activity - Arrangement of entire transportation, dispatching of goods and supervising the loading and unloading of the goods - Appellant contended that this activity is covered under Business Support Services from 1st May, 2006 - Held that - as per definition of the Business Support Services under section 65, it is found that managing distribution and logistics was covered under the said category as one of the goods on which service tax liability arises under Business Support Services . Therefore, the activity under taken by the appellant under Transport Coordination Services would be covered under Business Support Services with effect from 1.5.2006 and will not be covered under Business Auxiliary Services as per agreement. Demand not sustained and set aside. Demand - Business Auxiliary Services - Organized for collection of order from various stockist, distribution of said goods and collecting them from said stockist - Held that - this activity of the appellant, would fall under the category of Business Auxiliary Services under promotion or marketing or sale of goods produced or provided by or belonging to the client. Therefore, the service tax liability under this head is correctly confirmed by the adjudicating authority. The service tax liability along with interest is upheld. Demand for January 2005 to March 2006 - Goods Transport Agency Services - Appellant contended that the amount of service tax need re-quantification in as much - Held that - the appellant has not been able to show us the correct figures attributable correctly to inward in words transportation and outward transportation and also amount paid by them for transport of third party in the absence of any such information, so the service tax demand under goods transportation agency fastened on the appellant is correct. To soot out the limited question of quantification of limit of service tax liability, the matter is remitted back to adjudicating authority. Interest - Held that - Interest liability also arises on the appellant in respect of the service tax liability upheld Imposition of penalties - Section 76, 77 & 78 of the Finance Act, 1994 - Held that - except for penalty under section 76 ibid, penalties under other sections are unwanted in as much, by invoking the provisions of section 80. They may have had justifiable reasons for not paying the service tax as wordings of the agreement could have created a confusion. Accordingly, the penalty under section 76 is upheld and penalties imposed under section 77 and 78 ibid are set aside. - Appeal disposed of

Summary

Issues:
1. Tax liability on transport coordination services and organizing of sales.
2. Classification of services under "Business Auxiliary Services" and "Goods Transport Agency Services."
3. Correct quantification of tax liability for Goods Transport Agency Services.
4. Interest liability on the appellant.
5. Penalties imposed on the appellant under different sections of the Finance Act, 1994.

Tax Liability on Transport Coordination Services and Organizing of Sales:
The appellant provided services to Saurashtra Cement Ltd., including transport coordination and organizing sales. The lower authorities viewed these services as falling under "Business Auxiliary Services" and "Goods Transport Agency Services," leading to a tax liability. The appellant argued that the activities should be classified under "Business Support Services" post-May 2006. The tribunal agreed, noting that managing distribution and logistics, as per the agreement, aligns with "Business Support Services." Consequently, the tax demand on Transport Coordination Services was set aside. However, for organizing sales, the tribunal upheld the tax liability under "Business Auxiliary Services."

Classification of Services under "Business Auxiliary Services" and "Goods Transport Agency Services":
The tribunal analyzed the appellant's activities in detail. It found that the Transport Coordination Services were better categorized under "Business Support Services" post-May 2006 due to managing distribution and logistics. On the other hand, the organizing of sales fell under "Business Auxiliary Services" as it involved promoting or marketing goods. For Goods Transport Agency Services, the tribunal upheld the tax demand but remanded the matter for correct quantification based on discrepancies in figures provided by the appellant.

Correct Quantification of Tax Liability for Goods Transport Agency Services:
Regarding Goods Transport Agency Services, the tribunal acknowledged the correctness of the tax demand for the period in question but highlighted the need for re-quantification. Discrepancies between charges paid and balance sheet figures necessitated a reassessment. The matter was remanded to the adjudicating authority for accurate tax liability determination, with the appellant's cooperation assured for re-quantification.

Interest Liability on the Appellant:
The tribunal affirmed interest liability on the appellant concerning the upheld service tax liabilities, emphasizing the financial consequences of the decision.

Penalties Imposed on the Appellant:
The tribunal addressed penalties imposed on the appellant, upholding the penalty under section 76 of the Finance Act, 1994, while setting aside penalties under sections 77 and 78. The decision considered potential confusion arising from the agreement's wording, leading to justified non-payment of service tax in certain instances.

In conclusion, the tribunal disposed of the appeal by addressing each issue comprehensively, clarifying the tax liabilities, quantification concerns, interest liability, and penalties imposed on the appellant under different sections of the Finance Act, 1994.