2008 (8) TMI 84 - AT - Service Tax

Tribunal confirms service tax on rake handling charges, upholds taxpayer-friendly scheme

The Tribunal upheld the confirmation of the demand for the gross value, rejecting the appellant's contention that rake handling charges were not liable ... Cargo Handling Service – appellant submit that he is not liable to pay service tax on reimbursement of expenses viz, rake handling charges - in terms of the Finance Act, Cargo Handling means, loading, unloading, packing or unpacking of cargo etc. for all modes of transport, hence appellant’s contention is not acceptable – but dept. can’t deny the benefit of Extraordinary Tax Payer Friendly Scheme on the ground that only after the visit of the Superintendent, the appellant availed the scheme Issues:1. Liability of service tax on reimbursement of expenses for Cargo Handling Service.2. Applicability of the Extraordinary Tax Payer Friendly Scheme and denial of benefits.3. Imposition of penalties under various sections.Analysis:Issue 1: Liability of service tax on reimbursement of expenses for Cargo Handling ServiceThe appeal was filed against the Order-in-Appeal passed by the Commissioner of Central Excise, Mangalore, regarding non-remittance of Service tax for providing Cargo Handling Service. The appellant argued that rake handling charges were not liable for service tax. However, the Tribunal found that as per the Finance Act, Cargo Handling includes loading and unloading, which are integral parts of the service. Therefore, the gross receipt, including rake handling charges, was subject to Service Tax. The Tribunal upheld the confirmation of the demand for the gross value, rejecting the appellant's contention.Issue 2: Applicability of the Extraordinary Tax Payer Friendly SchemeThe appellant registered under the Extraordinary Tax Payer Friendly Scheme after a visit by the Superintendent. The Revenue initially denied the scheme's benefits, but the Tribunal disagreed. Referring to precedent, the Tribunal held that registration and payment under the scheme before a specified date exempted the appellant from penalties. The Tribunal criticized the Revenue's unfriendly approach in denying benefits due to the timing of registration, emphasizing the importance of honoring such schemes.Issue 3: Imposition of penalties under various sectionsThe Tribunal set aside all penalties imposed on the appellant as they were registered under the Extraordinary Tax Payer Friendly Scheme. Citing the scheme's provisions and past judgments, the Tribunal emphasized that penalties should not apply when a taxpayer avails of such friendly schemes. Consequently, the appeal was allowed to the extent of confirming the Service tax paid by the appellant and setting aside all penalties.In conclusion, the Tribunal ruled in favor of the appellant regarding the liability of service tax on reimbursement of expenses for Cargo Handling Service, the applicability of the Extraordinary Tax Payer Friendly Scheme, and the imposition of penalties. The judgment highlighted the importance of honoring taxpayer-friendly schemes and ensuring fair treatment in tax matters.