2012 (7) TMI 258 - AT - Service Tax

Tribunal orders appellants to deposit Rs. 25 lakhs within 8 weeks, based on majority decision.

M/s PORT OFFICER - GUJARAT MARITIME BOARD Versus COMMISSIONER OF CENTRAL EXCISE, BHAVNAGAR

M/s PORT OFFICER - GUJARAT MARITIME BOARD Versus COMMISSIONER OF CENTRAL EXCISE, BHAVNAGAR - 2013 (29) S.T.R. 360 (Tri. - Ahmd.) Issues:1. Misapplication of service tax provisions and inclusion of constituents revenue in taxable service value.2. Invocation of extended period for demand of service tax.3. Discretion under section 80 for waiver of demand.4. Pre-deposit requirement for hearing the case.5. Difference of opinion on the amount to be deposited.Issue 1: Misapplication of service tax provisions and inclusion of constituents revenue in taxable service value:The appeal filed by M/s. Gujarat Maritime Board against the demand of service tax and penalty raised concerns about the misconstrued application of service tax provisions. The appellant argued that the constituents revenue, namely 'waterfront royalty and way leave facility compensation,' were wrongly included in the taxable value of 'port' service. The appellant maintained that the service tax, penalty, and interest demanded were not leviable, advocating for a complete waiver under section 80 due to the alleged misinterpretation and incorrect application of the provisions.Issue 2: Invocation of extended period for demand of service tax:The appellant contended that they were not under the taxable service category until the period in question, and they had collected and paid service tax on the gross amount charged at the appropriate rate. The appellant argued against the invocation of the extended period of five years, emphasizing that there was no non-disclosure or suppression of facts regarding the taxable service value. However, the Revenue presented a strong case in favor of invoking the extended period, leading to a pre-deposit requirement for hearing the case.Issue 3: Discretion under section 80 for waiver of demand:The appellant sought discretion under section 80 for the complete waiver of the demanded service tax, penalty, and interest. The argument centered around the alleged misapplication of service tax provisions and the inclusion of constituents revenue in the taxable service value, emphasizing the lack of non-disclosure or suppression of facts on their part.Issue 4: Pre-deposit requirement for hearing the case:Upon reviewing the case facts, the Tribunal found that the Revenue had a strong case, though no observations were made on the case's merits. To proceed with the case, a pre-deposit of Rs. 3 crores was ordered within eight weeks, with further recovery and proceedings kept in abeyance until compliance was reported.Issue 5: Difference of opinion on the amount to be deposited:A difference of opinion arose between the Members regarding the required pre-deposit amount. One Member directed a deposit of Rs. 3 crores, while another Member suggested restricting the deposit to Rs. 25 lakhs, citing factors such as bonafide belief, conflicting decisions, and the stay on a relevant Larger Bench decision. The third Member agreed with the latter, emphasizing the appellant's prima facie case on the extended period and the lack of strong grounds for invoking it.In conclusion, the Tribunal directed the appellants to deposit Rs. 25 lakhs within eight weeks based on the majority order, with compliance to be reviewed on a specified date.