2015 (11) TMI 1110 - AT - Service Tax

Appellate tribunal upholds service tax demand for Customs House Agent & Steamer Agent services.

The appellate tribunal upheld the service tax demand of Rs. 8,43,226 with interest against the appellant for services provided as a Customs House Agent ... Non payment of service tax collected - Custom House Agent service - C & F service - Penalty u/s 76 & 78 - Held that:- Appellants have claimed that they were collecting amounts for various services such as obtaining space certificate, getting Port Health Officer report, getting warehousing licence, getting extension of warehousing licence, attending warehouse clearances, miscellaneous expenses, supervision expenses, miscellaneous DEPB expense etc. To a specific query from the Bench, learned counsel fairly agreed that for these amounts, the appellant do not have bills and he also could not specifically confirm that these were in the nature of reimbursement of actual expenses incurred by the appellant as a CHA so that the same can be considered as expenses incurred by a pure agent. In the absence of any evidence to show that these were reimbursable expenses and covered by bills and evidences to show that this was actual reimbursement of expenses, it would not be appropriate to consider the claim that the same cannot be charged to service tax. Therefore we consider that service tax of ₹ 8,43,226/- with interest liable to be paid on these amounts has to be upheld as demanded. The appellants do not undertake the responsibility of clearing and forwarding but have undertaken certain activities which we cannot consider as part of C&F agency service. Therefore, we consider that demand for ₹ 16,924/- also cannot be sustained. Penalty has been imposed under Section 76 as well as Section 78 of Finance Act, 1994. It is settled law that penalties under Sections 76 and 78 both cannot be imposed. Therefore we consider that penalty under Section 78 equal to the service tax demand upheld by us would meet ends of justice and penalty under Section 76 need not be imposed Issues: Service tax liability for various services provided by the appellant, imposition of penalties under Sections 76 and 78, classification of services as CHA, C&F agency, storage and warehousing, and steamer agency services.Service Tax Liability Analysis:The appellant, a service provider as a Customs House Agent (CHA) and steamer agent (SA), had paid service tax for these services but faced proceedings for allegedly providing C&F agency service and cargo handling service without paying service tax on certain collected amounts. The tribunal noted that the appellant collected various amounts for services without proper evidence of reimbursement of actual expenses incurred, leading to upholding a service tax demand of Rs. 8,43,226 with interest.Classification of Services Analysis:Regarding specific demands for C&F agency services provided to clients, the tribunal disagreed with the original authority's view on certain activities like documentation and weighment being part of CHA service, thus ruling against the confirmation of demands. Similarly, for demands related to storage and warehousing services and steamer agency services, the tribunal upheld the demands based on the activities undertaken by the appellant and agreed with the original authority's reasoning.Penalties Imposition Analysis:The tribunal noted the imposition of penalties under Sections 76 and 78 of the Finance Act, 1994, and clarified that both penalties cannot be imposed simultaneously. It decided to impose a penalty under Section 78 equal to the service tax demand upheld, while waiving the penalty under Section 76. This decision was made to ensure justice and compliance with the law.In conclusion, the appellate tribunal upheld the service tax demands for specific services provided by the appellant, disagreed with the classification of certain activities as part of CHA or C&F agency services, and clarified the imposition of penalties under Sections 76 and 78. The judgment provides a detailed analysis of the services rendered, the evidence required for reimbursement claims, and the appropriate penalties under the law.