2014 (2) TMI 146 - AT - Service Tax

Appellate Tribunal upholds service tax demands on cargo booking, stresses compliance with legal interpretations

The Appellate Tribunal CESTAT Mumbai upheld the service tax demands against the appellant, totaling Rs. 6,11,11,365/-; Rs. 7,95,640/- and Rs. 5,75,276/-, ... Demand of service tax - Imposition of equivalent penalty - Appellant submits that there is a duplication of demands - Steamer Agent Service - Held that:- what the appellant has undertaken is booking/canvassing of cargo. Therefore, the activity undertaken by the appellant squarely falls within the definition of steamer agent service - booking of cargo space would be liable to service tax and accordingly pre-deposit of the duty demand pertaining to normal period of limitation is ordered - Following decision of Greenwich Meridian Logistic (I) Pvt. [2013 (9) TMI 260 - BOMBAY HIGH COURT] - Conditional stay granted. Issues:Service tax demands confirmation against the appellant, duplication of demands, liability of ocean freight to service tax, definition of steamer agent service, booking of cargo space liable to service tax.Analysis:The judgment by the Appellate Tribunal CESTAT Mumbai pertains to appeals and a stay petition against an Order-in-Original passed by the Commissioner (TAR), Mumbai, confirming service tax demands against the appellant. The demands confirmed were Rs. 6,11,11,365/-; Rs. 7,95,640/- and Rs. 5,75,276/- along with interest and penalties. The appellant argued that there was a duplication of demands amounting to Rs. 1.97 crore, which is not sustainable in law. Additionally, the appellant contended that service tax on the difference in ocean freight collected should not be applicable, citing relevant tribunal decisions and a circular by the Board. The Commissioner (AR) for the Revenue supported the adjudicating authority's findings but acknowledged the duplication of demand. The Commissioner argued that the extra freight collected by the appellant on booking of cargo constitutes commission earned and is liable to service tax.The Tribunal considered the submissions from both sides and analyzed the definition of taxable service concerning 'Steamer Agent Service.' The Tribunal noted that the appellant's activity of booking/canvassing cargo falls within the definition of steamer agent service. Referring to a previous case, the Tribunal highlighted that booking of cargo space could be liable to service tax. Following this precedent, the Tribunal directed the appellant to make a pre-deposit of Rs. 25 lakhs within six weeks, with compliance required by a specified date. Upon compliance, the balance of dues against the appellant would be waived, and recovery stayed during the appeal's pendency.The judgment underscores the importance of understanding the specific definitions and legal interpretations of taxable services in the context of service tax demands. It also highlights the significance of precedent in legal decisions and the requirement for compliance with directives issued by the Tribunal.