Container detention charges treated as penal rent, not taxable service consideration, and therefore not liable to service tax.

Container detention charges collected for retention of containers beyond the contractual or pre-holding period are not liable to service tax. The Board's circular clarified that such retention is neither a service provided on behalf of the client nor infrastructural support in the shipping line's or customer's business; the charges were treated as penal rent for delayed return of containers rather than consideration for a taxable service. On that basis, the issue was decided in favour of the assessee.

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Issues: Whether container detention charges are liable to service tax.

Analysis: The circular issued by the Board clarified that retention of containers beyond the pre-holding period is neither a service provided on behalf of the client nor infrastructural support in the business of the shipping line or customer. Such charges were treated at best as penal rent for retaining the containers beyond the stipulated period, and the amount collected as detention charges was stated to be not chargeable to service tax.

Conclusion: Container detention charges are not liable to service tax and the issue is decided in favour of the assessee.

Ratio Decidendi: Amounts collected as detention charges for retention of containers beyond the contractual period, being in the nature of penal rent and not consideration for a taxable service, are not chargeable to service tax.

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