9911796707
TMI Blog2008 (2) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000-01 to 2004-05. The show cause notice proposed a demand of service tax under the following categories (i) Port service (stevedoring) (ii) CHA services (iii) Cargo handling services In all a total amount Rs. 80,41,227/- was proposed to be demanded from the appellants. However on adjudication, the Adjudicating authority confirmed a demand of Rs. 75.34 lakhs in the following manner: (i) Port services Rs. 41,83,131/- (ii) Cargo handling services Rs. 28,34,810/- (iii) CHA services Rs. 5,16,296/- He imposed equal penalty to the total demand under Section 78 of the rmance Act, 1994. Further interest under Section 75 of the Act was also demanded. The appellants are aggrieved over the impugned order and therefore they have come before the Tribunal for relief. 2. S/Shri C. Madhusudan, Director and Authorised Representative of the appellant's company and Stevan L D'Sousa, learned Consultant appeared on behalf of the appellants and Mrs. Sudha Koka, learned SDR for the Revenue. 3. We heard at length both the sides in the matter. 4. The appellants gave a very detailed reply relying on several case laws. The learned Departmental Representative reiterated the impugned order. In or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the appellants undertook the entire activity is that contention of the appellants before the Adjudicating authority is that in respect of the contract entered with M/s. RINL, they had undertaken only stevedoring activity which was carried out by taking the labour supplied by Dock Labour Board (DLB) and Vizag Port Trust (VPT). It is their strong contention that they had already discharged the service tax liability by payment to Dock Labour Board and Visakhapatnam Port Trust and also Dock Labour Board. It was strongly urged that the Commissioner has not taken into account the service tax already paid while confirming the demand. They stated that they are actually entitled for credit of the service tax paid in terms of the Cenvat Credit Rules and the Commissioner has not considered the documentary evidence supplied by them. As regards the cargo handling services, they had entrusted the work to two others, .namely Reliance Services and BA Logistic (P) Ltd. and if at all, those two service providers are liable for payment of service tax and the appellants are hot liable to pay any service tax. 4.1 As regards the contract with M/s. PEC Ltd., it is their submission that the entire serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment to scrutinize and issue a demand, if any, in time. In this case, it was stated, that the Department has invoked longer period and when the Department was in the knowledge of fact that the service tax returns have been filed regularly, there is no justification for invoking longer period. The appellants relied on a large number of case laws. Therefore even on time bar it was argued that the demand on account of service tax on CHA paid cannot be sustained, 4.4 Another contention of the appellant is that the services rendered by them would actually come under the category of Business Auxiliary Services which are taxable only with effect from 10-9-2004 and therefore during the relevant period they would not come under the service tax net. The reason for raising this contention is that even though they had a composite contract for CHA services, stevedoring and other allied services, they had outsourced services to other agencies who were the actual service providers. In view of this, it was urged that in terms of the Section 65A(2)(a) of the Finance Act, 1944 (sic) (1994), they are covered under the taxable service as CHA and Business Auxiliary Services. 4.5. It was also argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the demand itself is not sustainable, the question of imposing penalty does not arise. They also relied on various case laws. Further it was pleaded that in the absence of any liability to pay service tax, no interest is payable. 6. On a very careful consideration of the entire issue, we find that the Commissioner has confirmed an amount of Rs. 41,83,131/- as service tax payable on 'Port Services'. It is seen that this amount represents the service tax in respect of the amount received from M/s. PEC Ltd. It is already on record that in terms of the contract entered with M/s. PEC, the work relates to handling of maize and wheat which were exported. The commissioner has rejected the appellant's contention that the entire services provided under the contract with M/s. PEC is appropriately classifiable under "cargo handling services" on the ground that the appellants had composite contract and income on "stevedoring service" was shown in their ledger account. His reasoning is that there is no exemption for stevedoring services for export cargo. Therefore he has demanded service tax on the entire amount relating to export cargo under the 'port services'. There is no justification for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s far as the short levy and the demand of service tax on account of CHA services are concerned, it is seen that the appellant had been filing monthly returns regularly. Moreover they had paid services tax @ Re. 1/- per MT in terms of the Contract. The Department has levied service tax on 15% value of the composite contract. In our view this is arbitrary. In any case, the demand is time barred as the appellants had regularly been filing the service tax returns. Therefore we set aside the demand of Rs. 5.16 lakhs. In fine, we hold that the demand of Rs. 41.83 lakhs towards ports services and Rs. 5.16 lakhs towards CHA services cannot be sustained for the reasons already stated. As regards the liability in respect of 'cargo handling services', the appellants are liable to pay service tax in respect of the gross amount received by them from RINL for the services of stevedoring and cargo handling rendered by them. However, while computing the liability, service tax already paid by them to DLB and VPT should be taken into account. Further if sub-contractors had discharged the service tax liability on the amount received by them from the appellants, credit should be given, for that also. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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