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The CESTAT upheld the adjudicating authority's decision to dismiss tax proceedings against the assessee concerning demurrage charges from July 2012 to September 2015. The Tribunal found that the impugned declared service under section 66E of the Finance Act, 1994, which addresses recompense for refraining from or tolerating an act, was inapplicable as demurrage charges arose as contingent liabilities linked to the transportation of goods by sea, a service exempt from tax. The declared service's taxability is confined to standalone agreements and does not extend to liabilities incidental to other services. Given the lack of clarity and subsequent clarifications restricting the scope of declared services, the balance favored the assessee. Consequently, the appeal filed by the jurisdictional Commissioner of Customs was dismissed, confirming no tax liability on the demurrage charges.
The CESTAT upheld the adjudicating authority's decision to dismiss tax proceedings against the assessee concerning demurrage charges from July 2012 to September 2015. The Tribunal found that the impugned declared service under section 66E of the Finance Act, 1994, which addresses recompense for refraining from or tolerating an act, was inapplicable as demurrage charges arose as contingent liabilities linked to the transportation of goods by sea, a service exempt from tax. The declared service's taxability is confined to standalone agreements and does not extend to liabilities incidental to other services. Given the lack of clarity and subsequent clarifications restricting the scope of declared services, the balance favored the assessee. Consequently, the appeal filed by the jurisdictional Commissioner of Customs was dismissed, confirming no tax liability on the demurrage charges.
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