2023 (7) TMI 768 - AT - Service Tax

Levy of Service Tax - deposits made in favour of the appellant by the members of the consortium - difference in the rate charged by the appellant from the members of the consortium and non-members for providing cargo handling services - case of the department is that a lesser rate has been charged from the members of the consortium - period of dispute is 2014-15 and 2013-14. HELD THAT - It transpires from the records that for the previous years, three show cause notices had been issued to the appellant raising demand of service tax on two issues. The first issue was with regard to the demand of service tax on deposits made in favour of the appellant by the members of the consortium. The second was with regard to the demand of service tax on the difference in the rate charged by the appellant from the members of the consortium and non-members for providing cargo handling services . These three show cause notices were adjudicated by three separate orders confirming the demand. These three orders of the adjudicating authority were assailed before the Tribunal in three service tax appeals. All the three service tax appeals were decided by a common order dated 22.11.2019. The appeals were allowed and the three impugned orders were set asides. As the reasons given by the adjudicating authority for confirming the demands are the same as in the earlier three proceedings, the two orders, each dated 28.09.2017, passed by the Commissioner (Appeals) deserve to be set aside and are set aside. Appeal allowed.

Summary

Issues Involved:
The judgment involves the quashing of an order passed by the Commissioner of CGST & Central Excise dismissing two appeals related to the demand of service tax on cargo handling services provided by a company involved in constructing private railway sidings.

Details of the Judgment:

Issue 1: Demand of service tax on deposits made by consortium members
The company, along with a consortium, constructed private railway sidings for common use, collecting interest-free refundable deposits from consortium members. The Commissioner upheld the demand of service tax on these deposits, which was also raised in previous years. However, the Tribunal set aside this demand in a common order dated 22.11.2019, as the deposits were used for construction purposes.

Issue 2: Demand of service tax on difference in rates for cargo handling services
The main issue in the appeals was the demand of service tax on the difference in rates charged by the company for cargo handling services provided to consortium members and non-members. The Commissioner alleged that lower rates were charged from consortium members, but the Tribunal found this finding to be incorrect. The company charged rates based on various factors like the nature of commodity, handling requirements, and labor, and the rates were agreed upon commercially. The Tribunal held that the Commissioner's reasoning for not accepting the rates agreed under work orders was incorrect, as the prices varied depending on specific factors. The Tribunal concluded that the company did not suppress the taxable value, and the demands were set aside in favor of the company.

Conclusion:
The Tribunal allowed the appeals, setting aside the orders passed by the Commissioner (Appeals) dated 28.09.2017, as the demands of service tax on deposits and the difference in rates for cargo handling services were found to be unjustified.