TaxTMI 
TaxTMI 
2014 (6) TMI 592
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....xable service category of "Steamer Agent Services". The appellant was found to be collecting service charges in the form of 1) Bill of lading fees; 2) LCL consolidation charges; 3) Amendment charges for amendments in the Bill of lading; 4) Facilitation/processing charges; 5) Administration charges for stamp duty; 6) Delivery order fees for taking delivery of cargo; 7) Documentation fees for export to USA; 8) Hazardous Documentation charges for taking special care of hazardous cargo; 9) Bill of lading surrender charges; 10) Manifest correction charges; and 11) Detention waiver/refund processing charges, in respect of the import/export cargo handled by them from importers and exporters apart from the steamer agency charges from the shipping lines. The department was of the view that these services rendered by the appellant merited classification under "Business Auxiliary Service" (BAS in short) with effect from 1-7-2003 and accordingly issued a show cause notice dated 26th August, 2007 proposing to classify the services rendered as BAS and demanding service tax amounting to Rs. 1,37,36,500/- along with interest thereon and also proposing to impose penalties. The said notice was adjud....
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....td. [2008 (232) ELT 790 (Tri-LB)] and A.P. Federation of Chit Funds [2009 (13) STR 350 (AP)] are relied on in support of this contention. (d) Taxing statutes should be strictly interpreted and while classifying the activities under BAS, the individual clauses of section 65(19) of Finance Act, 1994, which defines BAS, should be carefully examined. Reliance is placed on the following decisions- Bansal Wire Industries Ltd. [2011 (269) ELT 145 (SC)] and Dr. Path Lab Ltd. [2006 (4) STR 527 (Del)]. (e) Extended period of time to confirm the demand could not have been invoked in the present case as mere-non-payment cannot result in intent to evade tax and bona fide belief entertained by the appellant should have been considered. There was no suppression of facts or active concealment on the part of the appellant to invoke the extended period and reliance is placed on the decisions of the Apex Court in Uniworth Textiles, Chamundi Die Cast (P) Ltd. [2007 (215) ELT 169 (SC)] and Tin Plate Co. of India Ltd. [1996 (87) ELT 589 (SC)]. (f) While computing the service tax demand, the adjudicating authority has not given the benefit of cu....
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....) Extended period of time has rightly been invoked as the service was taxable under BAS and the appellant has not produced any correspondence or enquiry made by them with the department indicating that they had any doubt about the applicability of service tax. Further they never declared to the department the fact of rendering services to various customers and receipt of consideration for the services rendered. (4) Simultaneous penalties can be imposed under sections 76 and 78 of the Finance Act, 1994 as held by the Delhi and Kerala High Courts in Bajaj Travels [2012 (25) STR 417] and Krishna Poduval [2006 (1) STR 185]. Accordingly the ld. AR pleads for upholding the impugned order and rejection of the appeal. 5. We have carefully considered the rival submissions. 5.1 It would be useful at this juncture to see the statutory definitions of BAS under Section 65(19) of the Finance Act, 1994 as it stood at various points of time and they are as follows:- 1-7-03 to 9-9-04 10-9-04 to 15-6-05 16-6-05 onwards "business auxiliary service" means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by or belonging to the....
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....intended for use by the client; (v) production or processing of goods for, or on behalf of, the client; (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to manufacture of excisable goods Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this clause, - (a) "commission agent" means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person - (i) deals with goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or services; or (iii) guarantees for collection or payment for such goods or ....
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.... for taking delivery of cargo; 7) Documentation fees for export to USA; 8) Hazardous Documentation charges for taking special care of hazardous cargo; 9) Bill of lading surrender charges; 10) Manifest correction charges; and 11) Detention waiver/refund processing charges. Thus these services were in relation to procurement of goods or services, which are inputs for the client and such services clearly fell under sub-clause (iv) of section 65 (19) as it stood with effect from 10-9-2004. Even if it is held that these activities did not fall under sub-clause (iv), they would certainly fall under sub-clause (vii) as any service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi). Even if the appellant had acted as a commission agent as claimed by them, they would fall under sub-clause (vii) of clause (19) of section 65 as the entry covered the services rendered as a commission agent. Thus we do not find any merit in the contention of the appellant that they were not liable to pay service tax prior to 16-6-2005. 5.5 The contention of the appellant that to come under BAS, there should be 3 parties and the service should have been rendered "on behalf of the clien....
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....06, they became aware of their liability to pay tax and accordingly discharged the service tax liability for the period from 16-6-2005 onwards. This contention of the appellant is not tenable. The appellant has been a service tax assessee since 1997 onwards under the taxable service category of steamer agent service. When the scope of BAS was expanded in the Budget 2004, the CBEC had issued a circular dated 17-9-2004 wherein it was clarified that the scope of BAS has been expanded to include activities relating to procurement of inputs, production of goods or provision of services on behalf of a client. Thus procurement of inputs, capital goods or input services by a commercial concern for a client would be taxable under the amended BAS. The appellant chose to ignore this circular and yet claims bona fide belief. As held by this Tribunal in the case of Interscape [2006 (198) ELT 275] bonafide belief is not blind belief and belief can be said to be bona fide only when it is formed after all reasonable considerations are taken into account. No evidence has been led before us showing that the appellant took all reasonable pre-cautions. Further the appellant did not disclose these acti....