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TMI Blog2008 (2) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... mental authority for payment of service tax under the CHA services. The officers of the Department visited the premises of the appellants and conducted certain investigation. On the basis of the investigation, it was revealed that the appellants did not discharge the correct amount in respect of service tax payable on cargo handling services and port services. Hence penal proceedings were initiated against the appellants for the period from 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 befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uxiliary services like sprinkling water, etc. It is on record that even though the con tract with M/s. RINL is in respect of stevedoring and other cargo handling services, the appellants undertook only stevedoring and in respect of cargo handing, they entrusted the work to two service providers who are (i) Reliable.Services (ii) BA Logistics (P) Ltd. In other words, the work of cargo handling had been sub contracted to two parties. In respect of stevedoring activity, 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by them with M/s PEC Ltd. They had actually collected CHA charges @ of Re. 1/- per MT. However it was urged that the Department had total amount collected from M/s. PEC in terms of the Board's Circular issued in 1997. It was argued that the Board's Circular has no legal force. The levy of service tax on 15% of the amount collected from M/s. PEC Ltd. is arbitrary. Further it was submitted that the appellants had been filing the service tax returns regularly and it was the Department 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44 (sic) (1994). It was the contention that the demand for cargo handling done within port cannot be charged to service tax under cargo handling services as per Board's circular. They are categorized as "port services" and tax collected on their behalf and later paid by DLB and Vizag Port Trust. This was done with a view to consolidate tax collection from one agency, instead of collecting it from assorted steamer agents. 5. In view of the above submissions, the appellants stated that when 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 appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the liability of the appellant in respect of the amount payable on account of the contract entered between them and RINL has to be recomputed after taking into account the service tax already paid. The appellants are duty bound to produce evidence of payment of service tax on services rendered by two sub-contractors. If service tax had not been paid by them, the appellants should pay appropriate service tax. For this purpose the appeal is required to be remanded to the Original authority. 8. As 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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