2010 (11) TMI 258 - AT - Service Tax

Demand of Service Tax - Detention charges collected from shippers on behalf of the shipping line - Assessees retained a part of the amount as per RBI norms for their administrative works - The norms of RBI the detention charges also clearly fall under husbandry fees since they retained by the appellants for their administrative work - Hence the demand of service Tax is upheld. Logistic fee paid to agent for container handling - Any fee paid to the agent towards container handling is also a husbandry fee - The actual expenses incurred in respect of container husbandry are fully reimbursed by the shipping line but this fee is paid to the agent for monitoring the operations - The expenses incurred by agent in monitoring the operations are not deductible from the taxable value - Hence the Service Tax demand is upheld. The submission of the assessee that the amount requires re-quantification cannot be considered as this plea was not raised either before the adjudicating authority . The maximum penalty is not warranted - Reduce the penalty to the amount of Service Tax upheld.

Summary

Issues: Appeal against confirmation of demand of Service Tax on detention charges and logistic fee.

Analysis:
1. Detention Charges: The appeal challenged the demand of Service Tax amounting to Rs. 88,782 on detention charges collected from shippers on behalf of the shipping line. The Tribunal observed that after deducting local expenses and repatriating some amount to principals, the assessees retained a portion of the amount as per RBI norms for administrative purposes. The retained amount was categorized as husbandry fees, including the detention charges which were also retained for administrative work. Consequently, the Tribunal upheld the demand of Service Tax under this heading.

2. Logistic Fee: The Tribunal also addressed the logistic fee issue, determining it to be a receipt paid to an agent for container handling, which falls under the husbandry fee category. Although the shipping line fully reimbursed the actual expenses related to container husbandry, the fee paid to the agent for monitoring operations was not deductible from the taxable value. Therefore, the Service Tax demand on this count was upheld. The Tribunal dismissed the assessee's plea for re-quantification as it was not raised before the adjudicating authority or the lower appellate authority.

3. Penalty: Regarding the penalty, the Tribunal noted that the statute allows for a maximum penalty of twice the Service Tax amount. However, considering the circumstances of the case, the Tribunal deemed the maximum penalty unwarranted. Consequently, the penalty was reduced to the amount of Service Tax upheld, which was Rs. 88,782. The appeal was partly allowed based on these considerations.

In conclusion, the Tribunal upheld the demand of Service Tax on both detention charges and logistic fee, while reducing the penalty to the amount of Service Tax upheld. The decision was made based on the categorization of the charges and fees involved, as well as the statutory provisions regarding penalties.