TaxTMI 
TaxTMI 
2022 (2) TMI 455
X X X X Extracts X X X X
X X X X Extracts X X X X
....ght • Detention Charges • Toll tax And pass such other and further orders in favour of the appellant'. 3. This appeal assails the impugned order partially: The prayer is to: a) service tax on markup/differential of ocean freight, detention charges and toll tax be set aside; b) Demand beyond the period of five years from the date of SCN, i.e., October 2009 to March 2010 may be set aside; c) Penalties under Section 77 & 78 may be held to be unsustainable and set aside. 4. The submissions of the appellant with respect to the above are as follows: Service tax on mark-up/ differential of ocean freight a) The appellant is a multi-modal goods transporter under the Multi-modal Goods Transport Act, 1993 and is registered with the Directorate General of Shipping. It provides (i) Customs clearance service; (ii) Transportation service; and (iii) Freight forwarding service. b) It books cargo space on ships with the shipping lines and in turn, sells it to its customers. The Shipping line issues a Master Bill of Lading in its name and in turn, it issues House Bills of Lading to its customers. c) The appell....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection by the authorities which the appellant pays and gets reimbursed by its customers. Thus, no service element is involved in it. Invocation of extended period of limitation o) The impugned order confirmed the demand invoking extended period of limitation on the ground that the appellant had suppressed facts. p) The Commissioner, had, observed in paragraph 166 of the impugned order that the appellant had failed to disclose the CENVAT credit availed and utilized in ST-3 returns. This observation was only in the context of demand of interest on the ground of alleged delay in utilizing credit which demand has been dropped by the Commissioner. q) Relying on Oriental Insurance Company Ltd. [2021-TIOL-307-CESTAT- DEL] and Emaar MGF Land Ltd. [2021-VIL-374-DEL-ST] , it is argued that suppression has to be willful and mere omission is not sufficient to invoke extended period of limitation. Demand for the period October 2009 to March 2010 is beyond even the extended period of limitation of five years r) Even in case of fraud, collusion, willful misstatement or suppression of facts, the demand can be raised only within five years, the demand in re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....must be for the service and it cannot be for some other purpose. For instance, if any amount is received towards any compensation, such amount cannot be taxed. 9. As far as the differential in ocean freight is concerned, the appellant buys space on ships from the Shipping Line and the Shipping Line issues a Master Bill of Lading in favour of the appellant. In turn, it sells the space to its customers and issues a House Bill of Lading to each of them. The first leg is the contract between the Shipping line and the appellant. The second leg is the contract between the appellant and its customers. Evidently, anyone who trades in any merchandise or service buys low and sells high and the margin is his profit. To earn this profit, he also takes the risk of being unable to sell. In the appellant's case, if the space on the ships which it bought cannot be sold to its customers fully, or due to market conditions, or is compelled to sell at lower than purchase price, the appellant incurs loss. In a contrary situation, it gains profits. This activity is a business in itself on account of the appellant and cannot be called a service at all. Neither can the profit earned from such business ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpanies / steamer agent provide a pre-determined period within which the container (that has gone out of the port) is to be returned. This is called as 'pre-holding period' and the duration of the same is mentioned in the contract. In case there is any delay on the part of the customer in returning the container, the charges known as 'detention charges' are collected over and above the contracted amount by the shipping line. 3. Representations have been received in the Board that service tax has been demanded on such 'detention charges' under the 'Business Support Service (BSS)' or 'Business Auxiliary Service (BAS)'. 4. The issue has been examined. To retain the container beyond the pre-holding period is neither a service provided on behalf of the client (Business Auxiliary Service) nor is it an infrastructural support in the business of either the shipping lines or the customer (Business Support Service). Such charges can at best be called as 'penal rent' for retaining the containers beyond the pre-determined period. Therefore, the amount collected as 'detention charges' is not chargeable to service tax. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....evied or short-paid or erroneously refunded by reason of - (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "thirty months", the words "five years" had been substituted. Explanation.- Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of thirty months or five years, as the case may be. (1A) Notwithstanding anything contained in sub-section (1) except the period of thirty months of serving the notice for recovery of service tax), the Central Excise Officer may serve, subsequent to any notice or notices served under that sub-section, a statement, containing the details of service tax not levied or paid or short levied or short paid or erroneously refunded for the subsequent period, on the person chargeable to service tax, then, service....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h information shall not serve any notice under sub-section (1) in respect of the amount so paid : Provided that the Central Excise Officer may determine the amount of short-payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of "thirty months" referred to in sub- section (1) shall be counted from the date of receipt of such information of payment. Explanation.1- For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the [Central Excise Officer], but for this sub-section. Explanation 2. - For the removal of doubts, it is hereby declared that no penalty under any of the provisions of this Act or the rules made thereunder shall be imposed in respect of payment of service tax under this sub-section and interest thereon. (4) Nothing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tement or suppression of facts or contravention of any of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person who has been served notice under sub-section (1) of section 73 shall, in addition to the service tax and interest specified in the notice, be also liable to pay a penalty not exceeding ten per cent. of the amount of such service tax : Provided that where service tax and interest is paid within a period of thirty days of - (i) the date of service of notice under sub-section (1) of section 73, no penalty shall be payable and proceedings in respect of such service tax and interest shall be deemed to be concluded; (ii) the date of receipt of the order of the Central Excise Officer determining the amount of service tax under sub-section (2) of section 73, the penalty payable shall be twenty-five per cent. of the penalty imposed in that order, only if such reduced penalty is also paid within such period. (2) Where the amount of penalty is increased by the Commissioner (Appeals), the Appellate Tribunal or the court, as the case may be, over the above the amount as determined ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....SECTION 78. Penalty for failure to pay service tax for reasons of fraud, etc. - (1) Where any service tax has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, by reason of fraud or collusion or willful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person who has been served notice under the proviso to sub-section (1) of section 73 shall, in addition to the service tax and interest specified in the notice, be also liable to pay a penalty which shall be equal to hundred per cent. of the amount of such service tax: Provided that in respect of the cases where the details relating to such transactions are recorded in the specified records for the period beginning with the 8th April, 2011 upto the 24 date on which the Finance Bill, 2015 receives the assent of the President (both days inclusive), the penalty shall be fifty per cent. of the service tax so determined : Provided further that where service tax and interest is paid within a period of thirty days of - the date of service of noti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e cause for the said failure. (2) Notwithstanding anything contained in the provisions of section 76 or section 77 or section 78, no penalty shall be imposable for failure to pay service tax payable, as on the 6th day of March, 2012, on the taxable service referred to in sub-clause (zzzz) of clause (105) of section 65, subject to the condition that the amount of service tax along with interest is paid in full within a period of six months from the date on which the Finance Bill, 2012 receives the assent of the President. 17. The findings of the Commissioner in the impugned order regarding the presence of any of the elements necessary for invoking extended period of limitation, holding that Section 73(3) would not apply and imposing penalty under Section 78 are contained in paragraphs 167 and 174 of the impugned order. Since in their ST-3 returns the appellants have not disclosed the service tax leviable on the disputed amounts and these came to light during the investigation from the data provided by the appellant, the Commissioner concluded that there was suppression of facts by the appellant. The relevant paragraphs read as follows: " 167. In view of the abov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s leviable on these receipts. 20. The appellant, having paid the service tax on those services which it rendered even before the SCN was issued and having argued that no SCN should have been issued to it as per Section 73(3), now in the synopsis submitted before us, has sought refund of the service tax paid. We find this prayer cannot be accepted for more than one reason. Once we have held that section 73(3) applies and no SCN should have been issued demanding the service tax, the basis for forming such a view, viz., payment of service tax with interest cannot now be reversed. Secondly, if service tax is payable, the charge of tax continues to exist. The limitation of time - either normal period or extended period- apply only to the remedy available to the Revenue by issuing a demand. Efflux of time does not extinguish the underlying liability. It is like a time-barred debt. After the time limit, the charge of debt remains and only the remedy to the lender gets extinguished. If the debt is time barred and thereafter it is repaid, the borrower cannot claim refund of what has been paid on the ground that the lender could not have sued him for recovery of the debt. 21. In this c....