Custom House Agent valuation excludes statutory port dues and reimbursable expenses; extended limitation fails without proven suppression.

Wharfage charges paid to port authorities and collected from clients were deductible from the taxable value of Custom House Agent services because the governing circular excluded statutory levies and reimbursable expenses from gross service charges, and the specific exclusion prevailed over the general lump-sum valuation method. The extended period of limitation was also unavailable because the returns were regularly filed, the department had access to invoices and records, and the record did not support suppression with mala fide intent. The impugned order was set aside and the departmental challenge failed.

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Issues: (i) Whether wharfage charges paid to port authorities and collected from clients were deductible while computing the taxable value of Custom House Agent services; and (ii) whether the extended period of limitation could be invoked on the facts of the case.

Issue (i): Whether wharfage charges paid to port authorities and collected from clients were deductible while computing the taxable value of Custom House Agent services.

Analysis: The Circular clarified that service tax on a Custom House Agent is to be computed on gross service charges, while payments made on behalf of clients towards statutory levies, including port dues, and other reimbursable expenses are excluded from computation of taxable value. Paragraph 2.5 dealing with lump-sum or turnkey imports and exports did not override the specific exclusion in paragraph 2.4. Wharfage charges being statutory port dues fell within the deductible category.

Conclusion: The wharfage charges were deductible, and the disallowance was unsustainable.

Issue (ii): Whether the extended period of limitation could be invoked on the facts of the case.

Analysis: The returns had been regularly filed and assessed, and the department had access to the relevant invoices and records. In those circumstances, the finding that there was no basis for alleging concealment and simultaneous invocation of the extended period for a part of the demand was inconsistent. The record did not support sustained suppression with mala fide intent.

Conclusion: The extended period of limitation was not invocable.

Final Conclusion: The assessee succeeded on both merits and limitation, the impugned order was set aside, and the departmental challenge failed.

Ratio Decidendi: Where a specific circular excludes statutory levies and reimbursable expenses from the taxable value of a service, that exclusion governs over a general lump-sum valuation method; the extended limitation period cannot be invoked in the absence of a sustainable basis for suppression once the relevant returns and records were available to the department.

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