2018 (9) TMI 1730 - AT - Service Tax

Business Auxiliary Service - business of booking space and collection of freight for M/s. British Airways World Cargo - visa services - Circular No.137/06/2011-ST dated 20.4.2001 issued by CBEC vide File No.332/2011/2010-TRU. Held that - Appellant submitted that the services are in the nature of export and therefore in terms of Rule 3(3) of Export of Service Rules 2005 the services are exempt. However on being questioned the learned counsel could not specifically reply as to whether such services are rendered only with reference to the export cargo or otherwise. He submitted that necessary details are contained in the agreements and he was not in a position to submit the agreements readily - thus for determination of the liability of service tax of the appellant vis- -vis the contracts and the actual nature of the work undertaken by the appellants so as to evaluate whether they can be termed as export of services. Visa Services - Circular No.137/06/2011-ST dated 20.4.2001 issued by CBEC vide File No.332/2011/2010-TRU - Held that - The services rendered by the appellants insofar as visa services are concerned are squarely covered by the clarification issued by CBEC vide the Circular - the demand as far as visa services rendered by the appellants are concerned does not sustain and is liable to be set aside. Issuance of show-cause notice seeking to increase the quantum of penalty under Section 76 from 100/- per day to 200/- per day - Held that - The Department was well within its rights to file an appeal before the appropriate form if it was felt that there was an error in the order - the subsequent order No.25/2008 being issued without authority of law is liable to be set aside. Appeal disposed off.

Summary

Issues:
1. Whether the appellants are liable to pay service tax for rendering Business Auxiliary Service as alleged by the Department.
2. Whether the activities related to visa services provided by the appellants are taxable under Section 65(105) of the Finance Act, 1994.
3. Whether the cargo general sales agreement entered into by the appellants is taxable under Section 65(105)(zzb) of the Finance Act, 1994.
4. Whether the subsequent increase in penalty under Section 76 from ?100 per day to ?200 per day by the Commissioner is valid.

Analysis:
1. The appellants were alleged to provide Business Auxiliary Service under Section 65(19) of the Finance Act, 1994, resulting in a demand for service tax. The Order-in-Original confirmed the demand, which was challenged in the appeal. The appellants argued that visa services provided by them do not fall under taxable services as per Circular No.137/06/2011-ST. The Tribunal upheld the appellants' contention, citing precedents and the Circular, thereby setting aside the demand related to visa services.

2. The appellants contended that the cargo general sales agreement is not taxable under Section 65(105)(zzb) of the Finance Act, 1994, as it falls under Rule 3(3) of Export of Service Rules, 2005. The Tribunal remanded this issue back to the original authority for further evaluation based on evidence provided by the appellants to determine if the services qualify as export of services.

3. The Commissioner sought to increase the penalty under Section 76 from ?100 to ?200 per day through a subsequent show-cause notice. The Tribunal found this action to be an error as it amounted to a review of the original order without proper authority. The Tribunal set aside the subsequent order, stating that the Department should have filed an appeal if there were concerns about the original order.