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TMI Blog2025 (1) TMI 1440X X X X Extracts X X X X X X X X Extracts X X X X ..... lants would pay to railways the wharfage and demurrage charges and thereafter, claim the same on actual basis from cement companies. These documents support the submission of the appellant that they were merely paying on behalf of the cement companies and it was on reimbursement basis. The Adjudicating Authority has denied the exclusion of these charges primarily on the grounds that there is no evidence to suggest that this was being reimbursed on actual basis by the cement companies to the appellant, which, however, is not correct, in view of the representative documents submitted by the appellant. In any case, the department's stand is that in terms of Rule 5 of the Service Tax (Determination of Value) Rules, 2006, any amount received as reimbursement needs to be included in the gross value. However, in view of the judgment of Hon'ble High Court of Delhi, subsequently, upheld by Hon'ble Supreme Court, in the case of Intercontinental Consultants & Technocrats Pvt Ltd [2018 (3) TMI 357 - SUPREME COURT], Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 was held ultravires. It was only after amendment in Section 67 by the Finance Act, 2015, the reimbursement expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation has been rightly invoked. However, it is subject to demand getting sustained on merit itself in the denovo proceedings.
Conclusion - i) The demand for including wharfage and demurrage charges in the gross value for SWS is unsustainable, and this portion of the demand is set aside. ii) The issue of GTA service liability is remanded for determination of who is liable to pay the Service Tax and whether the cement companies have discharged the liability. iii) The amount of Service Tax collected and paid under Section 73A needs to be redetermined, and penalties should be reassessed accordingly. iv) Penalties under Sections 76 and 78 cannot be imposed simultaneously, and reassessment is required based on the sustainable demand. v) The issue of the correct penalty rate under Section 76 is remanded for determination based on the actual cut-off date and statutory provisions.
Appeal allowed in part by way of remand. X X X X Extracts X X X X X X X X Extracts X X X X ..... lows:- For the sake of clarity, the arguments for inclusion of wharfage and demurrage income in the gross value and leviability of Service Tax on the SWS services are discussed below:- 4.1. Storage & Warehousing Services:- i) He has relied on the appointment letter dt.24.10.2007 in respect of clearing agent service at Goa (Pg.32 of Vol-I attached to appeal memorandum for stay in appeal No. ST/1839/2012) to support his contention that these wharfage and demurrage charges are on reimbursement basis and they were required to pay first, as per the agreement and thereafter, claim the same on actual basis from the cement companies i.e., Grasim Industries & Ultratech. Further, he has shown representative invoices raised by them on the cement companies. He has shown copies of demurrage charges bills raised by the Railways on various cement companies as well as invoices raised by the appellant on cement companies for recovery of the same on actual basis. These documents have been produced, which are appended to the Appeal memorandum from Pg.128 to 225 of Vol-I. He has also relied on the judgment of Hon'ble Supreme Court in the case of UOI Vs Intercontinental Consultants & Technocrats Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -I) that the amount of Rs.38,36,413/- has already been paid to the Government along with interest and therefore, to that extent Section 73A demand will not survive. Even for the remaining amount, they are arguing that that amount has been paid, though they have no credible evidence to support the same. 4.4. Penalty:- i) Learned Counsel also contests the imposition of penalty in respect of RIS on the grounds that the amendment by way of substitution came in Finance Act, 2012, which makes the transaction from 2007-2010 taxable and relying on Section 80(2), wherein after amendment, it reads that "notwithstanding anything contained in the provisions of section 76 or section 77 or section 78, no penalty shall be imposable for failure to pay service tax payable, as on the 6th day of March, 2012, on the taxable service referred to in sub- clause (zzzz) of clause (105) of section 65, subject to the condition that the amount of service tax along with interest is paid in full within a period of six months from the date on which the Finance Bill, 2012 receives the assent of the President." In this case, it is an admitted position that Service Tax was paid along with interest in 2011 itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the details of the rake cleared to the branch/C&F office. g) Unloading material on wharf and loading to trucks directly or transferring the material from goods shed to godown and unloading at godown. h) Following up with the Railway authorities for wagons which are in transit and keeping the C&F/company informed of the same. i) Allowing loading of dealers own/hired trucks as per instructions of the company. j) Arranging sufficient trucks for transportation and obtaining proper acknowledgement from the person to whom cement is delivered. 8. For these activities, they were getting certain payments at agreed rate for various items of work from the cement companies. It is an admitted fact that the entire case has been made out based on the income side reflected in their P&L account and its comparison with ST3 returns. It was observed by the department from the P&L account that certain income has not been included in the gross value for discharging their Service Tax liability on the services of SWS. The department has relied on the provisions of Section 67 of the Finance Act, 1994 read with Rule 5 of Service Tax (Determination of Value) Rules, 2006. We have perused the documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has been received on reimbursement basis would not sustain and on this ground also, demand to the extent of non-inclusion of income on account of reimbursable wharfage and demurrage charges would not sustain. 10. Coming to the issue of GTA service, on one hand, learned Advocate is insisting that they are covered within the definition of GTA and therefore, in the facts of the case, the Service Tax liability has to be made good by the cement companies on RCM basis and not by them, whereas, the department is also admitting that this amount of transportation charges from the railway station to their godown is not taken into account for the purpose of calculating gross value and short payment and only ex-godown has been taken into consideration. The other issue is whether department has relied on the income shown as local transportation charges, which has been subsequently reimbursed at agreed rate, as also any other charges, which could be on account of their having paid initially for transportation of goods from railway station or godown directly to the distributor premises and later recovered by them. Since these aspects are not clear from the facts of the case, this needs to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and getting sustained on merit itself in the denovo proceedings. 15. Therefore, to sum up, the demand on account of inclusion of demurrage and wharfage charges would not sustain and is set aside. Since demand itself is not sustained, the penalties will also not sustain to that extent. Further, as regards issue of GTA service, in view of the discussions supra, the Adjudicating Authority will be required to ascertain as to who shall be the person liable to pay the Service Tax in the factual matrix and their being a GTA. Moreover, it would also required to be seen that if cement companies are required to pay the Service Tax and they have actually paid the Service Tax, then no liability shall be on the appellant. However, this issue is left open, which will have to be re-adjudicated after going through the facts. As far as the issue of demand under Section 73A is concerned, as discussed in the foregoing paras, the amount of Service Tax actually paid out of the Service Tax amount actually collected, needs to be redetermined, as also the date of payment. In case, the entire amount collected was paid before the cut off date in 2012, there shall not be any penalty imposable on them, in vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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