2020 (3) TMI 914 - AT - Service Tax

Tribunal rulings on service tax appeals: mixed outcomes on demands, penalties, and remands

United Port Services Pvt Ltd. Versus Commissioner of Central Excise, Customs and Service Tax Hyderabad - II

The Tribunal partly allowed Appeal No. ST/2820/2012 by setting aside the demand on the sale of water and renting of immovable property. The demand for GTA ... Non-payment of service tax - Water supply / sale to customers in the port - Renting of immovable property - Transport of goods by road - demand of service tax alongwith interest and penalties - excessive adjustment of service tax - extended period of limitation. Water supply / sale to customers in the port - HELD THAT:- It is evident from the records of the case as well as the submissions of the Ld. Counsel for the appellant that they had purchased water and sold it to ships at a higher price. Thus, this is in our considered view, a case of purchase and sale of goods. Sale of goods is a taxable event for Sales Tax or VAT levied by the State Government. It appears from the records, that the appellant had reported the sales in their VAT returns to the State Government claiming an exemption from VAT available on sale of water. The availability of the exemption for sale of water is in dispute with the VAT department. There is no dispute with the State Government that the transaction is one of sale of water. Sale is not a taxable event to levy service tax. It would have been a different case if they had not bought or sold water but had only rendered some service in connection with the supply of water. For instance, if the users had purchased the water from someone else and if the appellant had only pumped or transported the water, etc., it would have definitely qualified as a service and if the service is rendered within the port, it would be exigible to Service Tax as Port Service. Selling goods on their on account to customers does not qualify as a service or else, every merchant in the country should be held to be rendering a service. Thus, sale of water is not exigible to Service Tax. Renting of immovable property service - HELD THAT:- A plain reading of the show cause notice in this case itself shows that the appellant have received amounts as advances for construction of a terminal for bunkering. There is no evidence that they have collected any rent towards bunkers or any other immovable property. If indeed, they have received any amounts for renting immovable property, it is not reflected in the show cause notice. Merely because the appellant has received some amounts from their customers they do not have to automatically pay service tax unless such amounts are relatable to rendition of a taxable service. GTA service - HELD THAT:- Learned Counsel concedes the demands GTA services and confirms that the tax has already been paid along with interest. Alleged excess adjustment of service tax - HELD THAT:- All the documents presented by them have not been considered by the Learned Commissioner in deciding this matter and we are of the opinion that the Commissioner should be given an opportunity to examine them and pass the reasoned order after following principles of natural justice as far as this demand is concerned. Demand of Interest - HELD THAT:- As the demands are set aside except on the GTA services on which the interest has already been paid along with the demand no further amounts need to be paid by way of interest. Penalties - HELD THAT:- As majority of the demands have already been set aside, it is a fit case to invoke Section 80 and all the penalties imposed upon the appellant are set aside. Appeal disposed off. Issues Involved:1. Liability to pay Service Tax on (i) Sale of water; (ii) Renting of Immovable Property; and (iii) Demand on Goods Transport Agency Service.2. Invocation of extended period of limitation under Section 73 of Chapter V of the Finance Act, 1994.3. Alleged excess adjustment of Service Tax.4. Chargeability of interest under Section 75 of Chapter V of the Finance Act, 1994.5. Imposition of penalties under Sections 77 & 78 of the Finance Act, 1994.Detailed Analysis:1. Liability to Pay Service Tax:a. Sale of Water:The appellant argued that the sale of water is outside the purview of the Finance Act, 1994, as it is a sale of goods and not a service. They provided documentary evidence showing the purchase and sale of water, which was declared in their VAT returns. The Tribunal agreed, noting that the transaction is a sale of goods and not a service. Therefore, it falls under the legislative competence of the State to levy VAT and is not subject to service tax.b. Renting of Immovable Property:The demand under this head was based on advances received for the construction of a terminal for bunkering. The Tribunal found no evidence that the appellant collected rent for any immovable property. The show cause notice did not establish that the amounts received were for renting immovable property. Thus, the demand for service tax on renting of immovable property was set aside.c. Goods Transport Agency (GTA) Services:The appellant did not contest the demand for service tax on GTA services and had already paid the amount. The Tribunal upheld this demand but set aside the penalties.2. Invocation of Extended Period of Limitation:The appellant disputed the invocation of the extended period of limitation, arguing that there was no fraud, misrepresentation, or suppression of facts on their part. The Tribunal did not find sufficient grounds for invoking the extended period of limitation for the demands related to the sale of water and renting of immovable property.3. Alleged Excess Adjustment of Service Tax:The appellant argued that the excess adjustment was due to an arithmetical mistake and was reflected in their returns. The Tribunal remanded this issue to the original authority for verification, instructing them to consider the documents presented by the appellant and follow the principles of natural justice.4. Chargeability of Interest:Since the demands for service tax on the sale of water and renting of immovable property were set aside, no interest was chargeable on these amounts. For the GTA services, the interest had already been paid along with the demand.5. Imposition of Penalties:The Tribunal invoked Section 80 of the Finance Act, 1994, to set aside all penalties, considering that the majority of the demands were set aside and there was no evidence of fraud or willful misrepresentation by the appellant.Conclusion:- Appeal No. ST/2820/2012: Partly allowed by setting aside the demand on the sale of water and renting of immovable property. The demand for GTA services with interest was upheld, but all penalties were set aside.- Appeal No. ST/22246/2012: Partly allowed and partly remanded for verification of the alleged excessive adjustment of service tax. All penalties were set aside.- Appeal No. ST/31287/2017: Allowed, and the impugned order was set aside with consequential reliefs.Disposition:The appeals were disposed of as per the above findings, with the operative part of the order pronounced in court on conclusion of the hearing.