TMI Blog2016 (12) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been clarified that "Service tax is not leviable on a transaction treated as sale of goods and subjected to levy of Sales tax/VAT. Whether a given transaction between the service station and the customer is a sale or not, is to he determined taking into account the real nature and material facts of the transaction. Payment of VAT/sales tax on transaction indicates that the said transaction is treated as sale of goods. Thus in an unequivocal terms it is made clear in the instant Circular that value of goods on which VAT is paid is not chargeable to Service Tax and therefore for this reason. I hold that the amount collected by the Noticee towards sales/auction proceeds does not fall under the purview of Service tax. Levy of tax not justified - appeal dismissed - decided against appellant-Revenue. - Appeal No. ST/194/11 - Order No.A/93470/16/STB. - Dated:- 29-6-2016 - Mr. Ramesh Nair, Member (Judicial) And Mr. C.J. Mathew, Member (Technical) Shri A.B. Kulgod, Assistant Commissioner (A.R.) for Appellant Shri Arun H. Mehta, Advocate with Shri Mayur Kadam, Advocate for respondent Per : Ramesh Nair The fact of the case is that the appellant is engaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant is selling the goods in open auction and receiving the sale proceed out of such auction, in this process no service recipient is existing. It is the foremost principle for levying service tax is that for provision of any service, provider and service recipient should exist then only the transaction of service can be completed by providing service of service provider and receiving the service by service recipient. In the present case, the service recipient does not exist. The activity is of sale of abandoned goods and the proceed of sale of goods does not attract any service tax. On perusal of the impugned order, we found that the Ld. Commissioner has by careful application of mind given a detailed finding for dropping the proceeding of the show cause notice. The relevant finding of the impugned order is reproduced below: .8.1 I have gone through the charges framed in the show cause notice, the case records, the submissions made by the Noticee No.1 and Noticee No.2 (the Noticees for short) in their written replies and the record of personal hearings. 8.2. The main activity for the Noticees is receiving containers with imported cargo andstuffing export cargo whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said amount. 9.2 The Noticees are in the business or providing storage and warehousing services in respect of imported cargo through their Container Freight Station and the crux of the demand against the Noticees is on the ground that the sole association or the Noticees with the abandoned cargo auctioned by them is through the various such services provided by them and thus any income earned by the Noiicees from the auction or such abandoned cargo. after paying the customs duty and other expenses. is gross amount accruing to the Noticees in lieu or the storage warehousing services provided by the Noticees in respect of such imported goods. It is the case of the department that the Service Tax is payable on the gross amount received by the Noticees, after deducting duties taxes paid. 9.3. It is an admitted fact that auctioning of uncleared cargo is part of the business activity of running a CFS and selling of such uncleared goods is not their separate business activity. Therefore. there is no dispute that the sole association of the Noticees with such goods is through the services of Storage and Warehousing services provided by them to the importer I depositor o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an is similar to that of a Bailee who has to pass on the proceeds to owner of such goods and that as per the law in force, this obligation is not extinguished at any point of time and that there is no defined period of limitation under the Act, where after the Custodian is specifically authorized to appropriate or deal with such amount. 10.3 In order to decide the ambit of service tax in relation to any activity, there needs to be a service provider and a service receiver. It also requires the realization of the amount for such services rendered by the service provider. In the instant case, pursuant to completion of auction and consequent to sale of such goods. the title of the goods passes to a successful bidder who eventually has not received any service on account of storage and warehousing of such goods. The auction of the said goods is carried out purely on a commercial basis and consideration so received obviously is without the element of cost of Storage and Warehousing charges. The successful bidder is in no way concerned with the Storage and Warehousing charges. It would be a fallacy to presume that the proceeds received in relation to auction sale of abandoned cargo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of Storage Warehousing Service . 10.6 Notification No. 12/2003 (ST) dated 2006.2003 exempts so much of the value of the taxable service as is equal to the value of the goods sold by the service provider to the recipient of service, from the service tax leviable thereon under Section (66) of the said Act subject that there is documentary proof specifically indicating the value of the said goods and material. In the instant case. the auctioned goods have been sold to the highest bidder and the amounts collected by the Noticees are on account of the sale of abandoned goods, and therefore the sales proceeds are clearly exempted from the levy of Service Tax. 11.1 The provisions of Section 65( I 05). Section 66. Section 64(3) and Section 67. if read conjointly. make it clear that in order to attract service tax there must be a taxable service provided, a service provider. a service receiver and a consideration received for the provision of the taxable service. In their case, they are forced to sell cargo as it is not claimed by the importer and no charge is levied for storage and warehousing service to anyone as no service emanates from them to anyone. As such. wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Noticee. This contention cannot hold grounds following the above ratio of the apex court that no tax can be levied on assumption. The apex court has also held that it is also well settled rule of construction of a charging section that before taxing a person it must be shown that he falls within the ambit thereof by clear words used as no one can be taxed by implication. 11.4 In CBEC's Master Circular No.96/7/2007-ST dated 2:)-08-2007. in Para 036.03. it has been clarified that Service fox is not leviable ON a transaction treated as sale of goods and subjected to levy).' of Sales tax/VAT Whether a given transaction between the service station and the customer is a sale or not, is to he determined taking into account the real nature and material facts of the transaction. Payment of VAT/sales tax on transaction indicates that the said transaction is treated as sale of goods. Thus in an unequivocal terms it is made clear in the instant Circular that value of goods on which VAT is paid is not chargeable to Service Tax and therefore for this reason. I hold that the amount collected by the Noticee towards sales/auction proceeds does not fall under the purview of Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
