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TMI Blog2022 (2) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appellant pays the Shipping line for the entire space booked and the customers pay the appellant for the space which they purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 respect of this period needs to be set aside. Penalties under section 77 &78 may be waived in terms of section 80 s) Section 73(3) provides that where any service tax not levied or paid or short levied or short paid before the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 be termed consideration for service. Respectfully following Satkar Logistics, Nilja Shipping Pvt. Ltd., Surya Shipping and ITC Freight services, we hold that the appellant is not liable to pay service tax. 10. As far as the container detention charges are concerned, these are charged by the ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lected 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. 5. The Board desires that pending cases, if any, on this issue may be decided in line with the above clarification. Yours faithfully, (Gautam Bhattacharya) Joint Secretary (TRU-II) Tel: 2309302 12. In view of the above, the demand of service tax on container detention charges is unsustainable and is liable to be set aside. 13. Toll tax is an amount paid by the appellant to the autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of such statement shall be deemed to be service of notice on such person, subject to the condition that the grounds relied upon for the subsequent period are same as are mentioned in the earlier notices. (1B) Notwithstanding anything contained in sub-section (1), in a case where the amount of service tax payable has been self-assessed in the return furnished under sub-section (1) of section 70, but not paid either in full or in part, the same shall be recovered alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. 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 contained in sub-section (3) shall apply to a case where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of - (a) fraud; or (b) collusion; or (c) willful 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. 4(A) [* * * *] (4B) The Central Excise Officer shall determine the amount of service tax due under sub-section (2)- (a) within six months from the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under sub- section (2) of section 73, the time within which the reduced penalty is payable under clause (ii) of the proviso to sub-section (1) in relation to such increased amount of penalty shall be counted from the date of the order of the Commissioner (Appeals), the Appellate Tribunal or the court, as the case may be. SECTION 77. Penalty for contravention of rules and provisions of Act for which no penalty is specified elsewhere. - (1) Any person, - (a) who is liable to pay service tax or required to take registration, fails to take registration in accordance with the provisions of section 69 or rules made under this Chapter shall be liable to a penalty which may extend to ten thousand rupees; (b) who fails to kee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified 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 notice under the proviso to (i) sub-section (1) of section 73, the penalty payable shall be fifteen per cent. of such service tax and proceedings in respect of such service tax, interest and penalty 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 service tax so determined : Provided also that the benefit of reduced penalty under the second proviso shall be available only if the amount of such reduced penalty is also paid within such period : Explanation. - For the purposes of this sub-section, "specified records" means records including computerised data as are required to be maintained by an assessee in accordance with any law for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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 above discussion, I thus hold that due to suppression of facts from the department by the Noticee the extended period of limitation is invokable in the instant case. ........ 174. I also find that the noticee failed to pay their due service tax in Govt. exchequer by suppressing the actual value of services provided by them by not filing Service Tax returns. I thus find that since they have willfully suppressed the facts regarding their service tax liability with intent to evade payment of service tax on the services provided by them to their customers/clients. Accordingly the noticee is liabel to penal action under the provisions of section 78 of the Finance Act, 1994. I further find that since all the transactions relating to this case, are duly recorded in the specified records such as invoices and statutory books of accounts of the noticee during the subject period, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 case, once the service tax, admittedly due, has been paid, albeit late and on that basis we have accepted the plea of the appellant that section 73(3) applies and no SCN should have been issued at all, the appellant cannot claim refund of the service tax paid. This would also apply to any service tax paid beyond the period of five years. 22. In view of the above discussions, we find that the appellant had, through its conduct during the investigation by providing all the information and paying the service tax with interest to the extent it had not disputed, has made out a case for seeking waiver of penalty invoking section 80. The penalty imposed under section 77(1) and 77(2) on the Act is set aside. 23. In view of the appeal is partly allowed and the appeal is disposed of as below: a) The demand of service tax on mark up on ocean freight, container detention charges and toll taxes is set aside. b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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