2017 (5) TMI 149 - AT - Service Tax

Tribunal rules in favor of appellant on service tax dispute, emphasizes correct classification and circular compliance.

M/s Aspinwall & Company Limited Versus C.C.E., Cochin

M/s Aspinwall & Company Limited Versus C.C.E., Cochin - 2017 (4) G. S. T. L. 48 (Tri. - Bang.) Issues:1. Classification of services under Port services and demand of differential duty.2. Disallowance of abatement claimed for CHA services.3. Confirmation of service tax amounts and penalties.Analysis:1. Classification of services under Port services:The appellant, engaged in shipping services in Cochin Port, was classified under Port services for activities within the port area. The Revenue demanded service tax based on various charges recovered, including port and dock charges, cargo handling charges, railway haulage charges, container handling charges, and labor charges. The appellant contended that their services should be classified as CHA services and not under Port services. The Tribunal referred to previous judgments, including the appellant's case in Mangalore Port, to conclude that services rendered within the port area did not fall under Port services. The demand for service tax under Port services was set aside.2. Disallowance of abatement claimed for CHA services:The dispute also involved the disallowance of the 85% abatement claimed by the appellant for CHA services. The appellant argued that they were discharging service tax based on 15% of the total consideration received, as per a Circular from 1997. The Revenue contended that since the appellant billed various charges separately, the abatement could not be allowed. The Tribunal held that the service tax payable for CHA services should only be on the agency commission charge, not on reimbursement of expenses. As the appellant's contracts were on a lump sum basis, the demand for service tax considering the entire amount received was deemed unjustified and set aside.3. Confirmation of service tax amounts and penalties:The impugned order confirmed service tax amounts for CHA and Port services, along with penalties under various sections of the Finance Act, 1994. However, the Tribunal, after considering arguments from both sides and perusing the records, set aside the impugned order. The Tribunal allowed the appeal, concluding that the demand for service tax under Port services and the disallowance of abatement for CHA services were not justified based on legal precedents and the specific circumstances of the case.In conclusion, the Tribunal ruled in favor of the appellant, setting aside the demand for service tax under Port services and disallowance of abatement for CHA services. The judgment highlighted the importance of proper classification of services and adherence to relevant circulars in determining the tax liability for specific types of services.