2025 (7) TMI 1337 - AT - Service Tax

Recovery of service tax with interest and penalty - amount reveived as brokerage services - pure agent services or not - extension of cum-tax benefit - invocation of extended period of limitation - HELD THAT - The issue involved in this case that the demand for the extended period is not sustainable is decided by this Tribunal in Intermark Shipping Agencies Pvt. Limited CCE vs. Kutch (Gandhidham) 2023 (12) TMI 681 - CESTAT AHMEDABAD and in Intermark Shipping Agencies Pvt. Limited CCE vs. CCE ST Rajkot 2023 (8) TMI 123 - CESTAT AHMEDABAD . The learned AR also concedes that the issue is now settled. Therefore the demand for the extended period is not sustainable. However considering the overall facts and circumstances of the present case the demand for the normal period is sustainable - the penalties imposed under Section 76 and 77 of the Finance Act 1994 also set aside. Appeal allowed in part.

Summary

ISSUES:

Whether brokerage services received by the appellant fall under the category of Steamer Agents Services liable to service tax under Section 66B of the Finance Act, 1994.Whether the appellant qualifies as a 'pure agent' under sub-Rule 2 of Rule 5 of Service Tax (Determination of Value) Rules, 2006 for exemption from service tax demand.Whether the appellant is entitled to cum-tax benefit under Section 67(2) of the Finance Act, 1994 when no service tax was charged from clients.Whether the extended period of limitation for service tax demand can be invoked in the present case.Whether penalties under Sections 76 and 77 of the Finance Act, 1994 are sustainable in respect of the extended period demand.

RULINGS / HOLDINGS:

The brokerage services received are liable to service tax under the category of Steamer Agents Services as per Section 66B of the Finance Act, 1994.The appellant does not fulfill the criteria contained in sub-Rule 2 of Rule 5 of Service Tax (Determination of Value) Rules, 2006 to be treated as a 'pure agent'; therefore, exemption on this ground is not applicable.Since the appellant did not charge service tax from their clients, the cum-tax benefit under Section 67(2) of the Act cannot be extended; "Section 67(2) of the Act allows cum-tax benefit only if the gross amount charged for the service is inclusive of service tax payable."The demand for the extended period is not sustainable, as settled by the Tribunal in earlier decisions involving the same issue and facts; hence, the extended period cannot be invoked.Penalties imposed under Sections 76 and 77 of the Finance Act, 1994 in respect of the extended period are set aside.

RATIONALE:

The legal framework is based on the Finance Act, 1994, particularly Sections 66B (definition of taxable services), 67(2) (valuation including service tax), 73 and 75 (interest provisions), and 76 and 77 (penalty provisions), along with the Service Tax (Determination of Value) Rules, 2006.The Tribunal relied on the Supreme Court precedent that "unless it is shown by the manufacturer that the price of goods includes Excise duty element, no question of excluding the duty from the price would arise," analogously applying this principle to service tax cum-tax benefit under Section 67(2).Earlier Tribunal decisions on the same appellant and issue have established that invoking the extended period of limitation is not sustainable, reflecting consistency and adherence to settled law.The Tribunal applied the principle that suppression of facts cannot be invoked repeatedly for the same issue in subsequent show cause notices, referencing the Supreme Court ruling in Nizam Sugar.The decision reflects no doctrinal shift but confirms the settled legal position on valuation, pure agent criteria, cum-tax benefit, and limitation periods for service tax demands.