2017 (8) TMI 1281 - AT - Service Tax

Levy of service tax - container detention charges - whether the container detention charges is subject to service tax or not? - Circular No. 121/2/2010-S.T., dated 26-4-2010 - Held that - Circular No. 121/2/2010-S.T., dated 26-4-2010 states that To retain the container beyond the pre-holding period is neither a service provided on behalf of the client (Business Auxiliary Service) nor is it an infrastructural support in the business of either the shipping lines or the customer (Business Support Service). Such charges can at best be called as penal rent for retaining the containers beyond the pre-determined period - the amount collected as detention charges is not chargeable to service tax - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether container detention charges are subject to service tax or not.

Analysis:
The appeal was filed against an order-in-original passed by the Commissioner, Service Tax, New Delhi. The appellant company provided containers for cargo handling to clients and levied "detention container charges" when the containers were not returned on time. The main issue was whether these detention charges were subject to service tax. The Circular No. 121/2/2010-S.T. clarified that retaining containers beyond the pre-holding period did not fall under Business Support Service or Business Auxiliary Service. The charges were considered as "penal rent" and not chargeable to service tax. The Tribunal found that the issue was covered by the circular in favor of the assessee and allowed the appeal, setting aside the impugned order. The judgment was delivered by Justice Satish Chandra, President of the Tribunal.