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TaxTMI 
2016 (9) TMI 1024
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....erein, The Department entertained a view that the appellants have rendered "business auxiliary services" (BAS) to various importers and exporters on behalf of RSIC at the ICDs. Proceedings were initiated against the appellant by issuing a show cause cum demand notice dated 18/10/2010 to demand and recover service tax of Rs. 8,04,80,401/- for the period from 01/4/2005 to 31/3/2009. The case was adjudicated by the Original Authority vide the impugned order confirming the service tax demand and imposing equal amount of penalty under Section 78 of the Finance Act, 1994. Additional penalties under Section 76 and Section 77 were also imposed. 2. Representing the appellant, the learned Counsel Ms. Reena Khair submitted that there is no service tax liability on the appellant. The learned Counsels arguments can be summarized as below (a) The agreement between the appellant and RSIC is on cost and revenue sharing basis. They are working on principal to principal basis and they are not providing service to RSIC. Both the parties put together their resources and undertake various activities to generate revenue which is shared between them on pre-determined ratios. In this type of a....
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....edit of the tax paid. As such, there is no loss to the Government. This plea is submitted to support the case of their bonafide understanding on tax liability with no monetary benefit accruing to them. Hence it is not a justifiable case for extended period demand and for penal action. 3. The learned AR strongly contested the grounds of appeal and submitted mainly on the following grounds:- (a) the terms of contract clearly established that the appellants rendered services in relation to import and export operations including all other incidental operation/ services as mentioned in Schedule 3 of the agreement. Agreement clearly states that the contractor has to render services as stipulated. There is no element of doubt regarding the arrangement between the appellant and RSIC which is clearly one of service provider and service recipient in relation to handling/ transport of import/export cargo of the clients; (b) the agreement is for composite contract for various services in connection with import and export cargo. It also clearly stipulates (Clause 1.2 of Schedule 1) that the appellants shall perform all the required marketing activities for ICD services. The....
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.... prices to be charged from the users. They have also to ensure that ICD users make payment of services to RSIC at the rate determined by the appellant. The "business auxiliary services" as defined under Section 65 (19) of the Finance Act, 1994 reads as under :- "Business Auxiliary Service" means any service in relation to • promotion or marketing or sale of goods produced or provided by or belonging to the client ; or • promotion or marketing of service provided by the client ; or • any customer care service provided on behalf of the client ; or • Procurement of goods or services, which are inputs for the client; or • Production or processing of goods for, or in behalf of, the client; or • Provision of service on behalf of the client; or • A service incidental or auxiliary to any activity specified in sub-clause (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, pu....
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.... as already indicated hereinabove. The agreement in the present case gives no room for doubt regarding the obligation of the appellants to render various services in terms of ICD operations owned and controlled by RSIC. The nature of financial dealings or payment of consideration for services rendered by itself will not decide the tax liability of the service. In the present case there is a taxable service rendered by the appellant. 6. The appellants contested the demand on the ground that the full value of consideration for taxable service as received by RSIC from various ICD users has suffered service tax and RSIC remitted the same to the Government. As such, it is the plea of the appellant that a portion of such consideration cannot be subjected to service tax again at the hands of the appellant. 7. We find that in terms of the agreement the appellants are rendering services like transport of containers, handling cargo and various other incidental activities for which an indicative estimate is given to RSIC. Thereafter, RSIC prepare the bill for charge which is paid by the ICD user and collected by the RSIC. This consideration is for overall services rendered by RSIC to va....
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.... for providing services to various exporters and importers on behalf of RSIC and getting certain consideration from RSIC for such services. The tax liability of the main party (RSIC) is not point of dispute in the present case and as such the issue involved is different from what is decided by the Hon'ble Kerala High Court. 9. In India Gateway Terminal (P) Ltd. vs. CCE/ Cochin reported in 2010 (20) S.T.R. 338 (Tri, - Bang.) the decision of the Tribunal is not on similar set of facts. It was a case of movement of cashew nut containers in the yard of CONCOR. It is not coming out as to the nature of service provided by India Gateway Terminal (P) Ltd. in that case. Further, we find the Tribunal in JAC Air Services Pvt. Ltd. vs. CST, Delhi reported in 2013 (31) S.T.R. 155 (Tri. Del.) was examining the Circular issued by the Board prior to 2007 to decide on the service tax liability of sub-contractors. We find that the Board issued a consolidated master Circular on 23/8/07 which categorically brought out the legal position regarding sub-contractor's service tax liability. It is held that service tax is leviable on any taxable service provided whether or not the services are pr....
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....nvolved has been a subject matter of interpretation by the Tribunal and High Courts. In fact the earlier Circular issued by the Board, covering the period prior to the introduction of Cenvat Credit Rules gave an impression that when the main service provider discharged the service tax on gross value there may not be tax liability on the sub-contractor rendering similar service to the main contractor. The Tribunal in various cases held in such a case involving interpretation of law and also a bonafide belief regarding service tax liability, will not attract the demand for extended period. We also take note that service tax liability on the appellant when discharged will be available as a credit to RSIC which can be used by RSIC for discharging their overall service tax liability. As such, to impute motivation to the appellant for intention to evade payment of duty is not sustainable. A reference can be made to the Tribunal's decision in British Airways vs. CCE (Adjn,), Delhi reported in 2014 (36) S.T.R. 598 (Trin - Del.), Atul Ltd, vs, CCE, Surat - 11 reported in 2009 (237) E.L.T. 287 (Tri. - Ahmd.). In the facts and circumstances of this case, we find that the demand for extend....