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2018 (8) TMI 330 - AT - Service TaxDemand of Service Tax - it was revealed that the appellants have not included value of all services provided/received for discharging their service tax under various categories like Port Services, Cargo Handling Services and Goods Transport Agency services for the period 2004-05 to 2005-06 - Extended period of limitation - penalty. Port Services - Held that - The Tribunal has analyzed the very same issue in their case ASPINWALL & CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MANGALORE 2010 (10) TMI 321 - CESTAT, BANGALORE , where it was held that Since the service provider are issued with stevedore licence by the NMPT to operate within the port area it cannot therefore be said that they are not authorized by the NMPT for rendering services in relation to vessels and goods within the port area - demand set aside. Demand on Cargo Handling Services in respect of raw sugar - Held that - The manufactured products are excluded from the definition of agricultural produce . The Notification is available only to such produce which fall within the definition given in the Notification. Since, in our opinion, raw sugar is a product which has undergone processing, we are of the opinion that the benefit of exemption is not extendable to raw sugar. Thus, the Cargo Handling Services in respect of handling of cargo of raw sugar would attract the levy of service tax - demand upheld. Penalties - Held that - No positive act of suppression has been established by the Department with cogent evidence to conclude that there is suppression of fact on the part of the appellant. Apart from merely stating that the appellants did not disclose the fact of rendering of Port Services, Cargo Handling Services and Goods Transport Agency Services, there is no deliberate act with an intention to evade payment of service tax established by the Department to conclude that there is suppression of facts - the penalty imposed under Section 78 with respect to both issues (Cargo Handling and GTA Services in respect of raw sugar) cannot sustain - penalty u/s 76 upheld. Appeal allowed in part.
Issues Involved:
1. Classification of services under Port Services. 2. Demand for Cargo Handling Services related to raw sugar. 3. Demand for Goods Transport Agency (GTA) Service related to raw sugar. 4. Invocation of extended period of limitation and imposition of penalty. Issue-wise Detailed Analysis: 1. Classification of Services under Port Services: The appellant argued that their services, classified under Custom House Agency (CHA), should not be reclassified under Port Services. They contended that they were not authorized under the Major Port Trust Act and merely held a stevedoring license, which does not equate to being authorized by the port. They supported their stance with various judgments, including their own cases in Mangalore and Cochin, where similar services were not classified under Port Services. The Tribunal agreed, citing previous decisions (e.g., Velji P. & Sons) and the expanded definition of Port Services in the Finance Act, 2010, which was not applicable to the period in question. Thus, the demand under Port Services was set aside. 2. Demand for Cargo Handling Services Related to Raw Sugar: The appellant claimed exemption under Notification No. 13/2003, arguing that raw sugar is an agricultural produce. The Department countered that raw sugar is a manufactured product excluded from the exemption. The Tribunal agreed with the Department, stating that the definition of agricultural produce explicitly excludes manufactured products like sugar. Consequently, the demand for service tax on Cargo Handling Services for raw sugar was upheld. 3. Demand for Goods Transport Agency (GTA) Service Related to Raw Sugar: The appellant admitted to collecting excess amounts over the actual freight incurred and did not contest the demand. The Tribunal, therefore, upheld the demand for service tax under GTA services. 4. Invocation of Extended Period of Limitation and Imposition of Penalty: The appellant argued that they were under a bona fide belief that raw sugar qualified for exemption, and thus, the extended period of limitation and penalties should not apply. The Department contended that the appellant wrongly availed the exemption and did not disclose handling raw sugar to evade service tax. The Tribunal found the definition of agricultural produce clear and rejected the bona fide belief argument. However, it noted that no positive act of suppression was established by the Department. Therefore, while upholding the demands, the Tribunal set aside the penalties under Section 78 for both Cargo Handling and GTA services related to raw sugar. Conclusion: The Tribunal's decision modified the impugned order by: - Setting aside the demand under Port Services. - Upholding the demand under Cargo Handling Services and GTA Services for raw sugar. - Setting aside the penalties imposed under Section 78 for Cargo Handling and GTA services related to raw sugar. The appeal was partly allowed with consequential benefits.
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