Service tax on retained auction balance rejected where warehouse keeper held funds as a deposit pending importer claim.

Amounts retained by a warehouse keeper after auctioning unclaimed imported consignments, once lawful dues and expenses are adjusted, were treated as a deposit pending claim by the importer rather than consideration for storage and warehousing services. Following Circular No. 11/1/2002-TRU and earlier materially similar decisions, the Tribunal held that no service tax arose on the balance retained amount merely because it remained with the assessee and was shown as interim income. The demand was therefore set aside, confirming that such retained balances are not taxable as service consideration on these facts.

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Issues: Whether service tax was payable on the balance amount retained by the assessee after auctioning unclaimed imported consignments and adjusting dues and expenses.

Analysis: The retained balance represented an amount kept in deposit until claimed by the importer and was shown as income only in the interim. The Tribunal followed its earlier view that Circular No. 11/1/2002-TRU dated 01.08.2002 applied, and that no service tax arose on such balance amount. The facts were found to be materially similar to earlier decisions holding that the amount remaining with the assessee after adjustment of charges was not taxable as storage and warehousing consideration.

Conclusion: The amount retained by the assessee was not liable to service tax.

Final Conclusion: The demand was set aside and the assessee obtained relief, with the revenue's challenge failing accordingly.

Ratio Decidendi: Amounts retained by a warehouse keeper after adjustment of lawful dues and awaiting claim by the importer do not, by that fact alone, constitute taxable service consideration for storage and warehousing services.

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