2016 (9) TMI 190 - AT - Service Tax

Appellant wins challenge on Service Tax demand, remand for further adjudication on short payments

The appellant successfully challenged the demand of Service Tax on Clearing and Forwarding Agency Services provided to M/s HUL, with the demand being ... Short payment of tax – demand of tax with interest – clearing and forwarding agent services – GTA services – business support services – rent-a-cab services - reverse charge mechanism – non-production of documents by the appellant – Held that: - similar issue decided in the case CCE, Raipur Versus M/s Supreme Warehousing Corporation [2015 (5) TMI 1064 - CESTAT NEW DELHI] where it was held that the transportation charges reimbursed to its C&F agent was not included in the assessable value. It was also held that Chartered Accountant certificate certifying the discharge of the duty liability under the category of GTA was not considered by the adjudicating authority. Even the other documents were not considered by the adjudicating authority - case remanded to adjudicating authority for consideration of all documents – appeal allowed. Issues:1. Demand of Service Tax on Clearing and Forwarding Agency Services provided to M/s Hindustan Unilever Limited (HUL)2. Alleged short payment of Service Tax on Business Support Services and rent-a-cab Services3. Constitutional validity of mandatory pre-deposit for availing appellate remedyIssue 1: Demand of Service Tax on Clearing and Forwarding Agency Services provided to M/s HULThe appellant had entered into a Clearing and Forwarding Agency Agreement with M/s HUL for providing services at various locations. The show cause notice alleged that the services provided by the appellant, including transportation and handling of goods, fell under Clearing and Forwarding Services and Business Support Services, taxable under Section 65(105)(j) of the Finance Act, 1994. The appellant contended that since M/s HUL was discharging Service Tax under reverse charge mechanism for GTA services, the appellant had been discharging service tax strictly as per law. The appellant argued that the taxable value had already suffered service tax in the hands of M/s HUL, which the department failed to prove otherwise. The Commissioner was criticized for exceeding jurisdiction and failing to follow judicial discipline. The demand was considered barred by limitation, and the charge of willful suppression of facts was refuted.Issue 2: Alleged short payment of Service Tax on Business Support Services and rent-a-cab ServicesThe adjudicating authority confirmed a demand for alleged short payment of Service Tax on Business Support Services and rent-a-cab Services provided by the appellant to M/s HUL and APSRTC. The appellant challenged the demand, citing that the taxable value had already suffered service tax in the hands of the recipients. The appellant provided a Chartered Accountant's certificate to support this claim, which the respondent rejected for lack of additional documents. The appellant argued that the department's classification of services was inconsistent and exceeded jurisdiction. The department defended the authority's well-reasoned order and exclusion of certain components from the assessable value. The Tribunal suggested remanding the matter for denovo adjudication considering the documents provided by the appellant.Issue 3: Constitutional validity of mandatory pre-deposit for availing appellate remedyThe appellant challenged the constitutional validity of the mandatory pre-deposit required for availing the appellate remedy before CESTAT. The Hon'ble Andhra Pradesh High Court ordered a temporary waiver of the pre-deposit pending appeal. The appellant sought a waiver of pre-deposit and stay of recovery of adjudged dues. During the hearing, both sides consented to consider the appeal itself, leading to the remand of the matter for denovo adjudication. The appeal was allowed in favor of the appellant for further consideration based on the documents provided.This detailed analysis covers the issues raised in the legal judgment, addressing the arguments presented by the appellant and the department, as well as the Tribunal's decision to remand the matter for further adjudication.