2024 (5) TMI 563 - AT - Service Tax

Evasion of service tax - amount of rebate /concession granted by the Noticee in the wharfage charges to M/s. NCCL Jafrabad allowed as adjustment - to be included in the assessable value or not - Extended period of Limitation - penalty - HELD THAT - In the instant case it appears the appellant was collecting wharfage charges of Rs. 45 per metric ton for movement of concrete and cement produced by M/s. NCCL through the Jetty in question. Same was run by the appellant. The appellant had authorized M/s. NCCL to carry out the work of dredging, maintenance and repairing of the Jetty for which their incurred expense of Rs. 1.96 crores. To compensate appellant, had allowed a concession of Rs. 8.50 per metric ton on the normal mortgage of Rs. 45 per metric ton till set off against the compensation amount of Rs. 1.96 crores. As per the department the wharfage charges given as concession were meant to compensate for the services provided to the appellant by M/s. NCCL and therefore liable to discharge service tax. The period involved in this case 2005 to 2011, that is prior to negative list period and as per the appellant the show cause does not even specify the service under which the services allegedly provided by them would fall. There are substance in the submission of the appellant as they were registered for providing port services but in the instant case as per the department they had received certain services from M/s. NCCL for which they were compensated later through charging of concessional wharfage rate. What services if any were provided by M/S. NCCL to them and under what category of the services these would fall has not been alleged. Therefore the impugned order as quoted above maintains silence relating to nature of taxable services provided. The taxability in present without classification cannot be attached also. Appeal allowed.

Summary

Issues Involved:

1. Non-payment of service tax on wharfage charges concession.
2. Failure to provide bifurcated value of the concession amount.
3. Alleged contravention of various sections of the Finance Act, 1994.
4. Suppression of facts and intention to evade payment of service tax.
5. Validity of the demand for service tax under the category of port services.

Summary:

1. Non-payment of service tax on wharfage charges concession:
The Noticee, M/s. Gujarat Maritime Board, Jafarabad, did not pay service tax on Rs. 1,96,00,000, which was adjusted as a concession of Rs. 8.50 per metric ton in wharfage charges. The department argued that this amount falls within the scope of gross amount u/s 67 of the Finance Act, 1994 and is liable for service tax.

2. Failure to provide bifurcated value of the concession amount:
The Superintendent of Service Tax requested the Noticee to submit the bifurcated value of Rs. 1.96 crores for specific periods. The Noticee only submitted details for Rs. 1,27,77,557, failing to account for the remaining Rs. 68,22,443. Consequently, service tax was calculated at appropriate rates for these amounts.

3. Alleged contravention of various sections of the Finance Act, 1994:
The department alleged that the Noticee contravened sections 67, 68, and 70 of the Finance Act, 1994, by failing to assess the correct value of taxable services, make timely service tax payments, and disclose the correct assessable value in ST-3 returns. These acts were considered suppression of facts with an intention to evade tax, invoking section 73(1) for recovery and sections 76, 77, and 78 for penalties.

4. Suppression of facts and intention to evade payment of service tax:
The department contended that the Noticee willfully suppressed facts and the nature and value of services provided, making them liable for penalties u/s 78 of the Finance Act, 1994.

5. Validity of the demand for service tax under the category of port services:
The appellant argued that no specific category of taxable service was alleged in the show cause notice, making the demand under port services invalid. They cited various case laws, including Shubham Electricals and UCB India Pvt. Ltd., to support their claim. The tribunal found substance in the appellant's submission, noting the absence of a specified service category in the show cause notice and the silence in the impugned order regarding the nature of taxable services.

Conclusion:
The tribunal concluded that the non-mention of the specific service category in the show cause notice made the demand untenable. Following the decision in the appellant's own case (Gujarat Maritime Board 2015), the appeals were allowed with consequential relief, rendering the point of limitation inconsequential.

Order:
The appeals are allowed. (Dictated and pronounced in the open Court on 08.05.2024)