TMI Blog2009 (1) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994. (ii) Penalty under the following sections :- (a) Rs. 200/- per day under Section 76 (b) Rs. 1,000/- under Section 77. (c) Rs. 6,59,58,799/- under Section 78 and (d) Rs. 2,000/- under Section 70 2. We heard both sides. 3. (sic) 5,76,650/-. The period involved in the two Show Cause Notices are 2004-2005, 2005-2006 and 2006-2007. The applicants are rendering various services in the Mangalore Port. They have been discharging service tax under the category of CHA at the rate of 15% of the gross receipts in terms of Board's Circular No. 39/97 dated 11-6-1997. It was argued that this issue was earlier the subject matter of adjudication before the Assistant Commissioner of Central Excise. The Joint Commissioner had passed an order dated 25-9-2006. Our attention was invited to the findings of the said order to show that the Department had all the information with regard to the activities carried out by the applicants. For example, in paragraph 13, in a tabular column, the following activities have been enumerated. (i) Handling of Bentonite (ii) Handling of Clay (iii) Handling of Coal (iv) Handling of Coke (v) Handling of Containers (vi) Handling of Limes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner (Appeals) cited supra. 3.4 Further, the learned Advocate stated that the Commissioner, in paragraph 64 of the impugned order, had come to the conclusion that the services rendered by the applicants would be rightly classifiable under Port Services only. While arriving at this conclusion, he has pressed into Section 65A(2)(b) of the Finance Act, 1944 (sic) 1994. It was stressed that the activities carried out by the applicants would not come under Port Services in view of the decision of this Bench in the case of Konkan Marine Agencies v. CCE, Mangalore - 2007 (8) S.T.R. 472 (Tri.-Bang.), which has been upheld by the Hon'ble High Court of Karnataka in CEA No. 12/2008 dated 13-3-2008 [2009 (13) S.T.R. 7 (Kar.)]. In these circumstances, it was urged that the entire demand is hit by time-bar. It was also stressed that the applicants, in fact, had been paying service tax on 15% of the gross receipts in terms of Board's Circular. They had also been filing the Service Tax Returns regularly. In such circumstances, the Department ought to have issued the Show Cause Notice within the normal period. However, they had invoked the extended period which is not admissible. It was fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts had been exclusively engaged in the handling of cargo outside the port and this has no connection to either exports or import or CHA work and yet they treated such services under CHA. 4.1 The Commissioner has demanded Service Tax on services rendered entirely within the Port area in respect of both imported goods and export goods under the category for reasons discussed in paras 43 to 55.4 and para 62.1 of the impugned order. The learned Special Counsel invited our attention to the decision of the Chennai Bench in the case of Western Agencies Others [2008 (12) S.T.R. 739 (Tri.-Chennai) wherein the said Bench has taken a contrary view with regard to the services rendered inside the port. In fact, according to the Chennai Bench, the services would fall under similar services and in view of contrary decisions, the matter had been referred to the Larger Bench vide Misc. Order No. 365/2008 dated 26-8-2008. 4.2 As regards limitation, it was submitted as follows: (i) Under Section 73(1) of the Finance Act, demand notice for short levy should be served within one year from the relevant date. The expression 'relevant date' is defined in sub-section (6) to be the date when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porarily or otherwise, under the regulations made under sub-section (2) of section 146 of the Customs Act, 1962. A person is permitted to operate as a custom house agent temporarily under regulation 8(1) and permanently under regulation 10 of the Customs House Agents Licensing Regulations, 1984. 2.2 As per the Finance Act, 1997, the taxable service rendered by a custom house agent means any service provided to a client by a custom house agent in relation to the entry or departure of conveyances or the import or export of goods. The value of the taxable service in relation to the service provided by a custom house agent to a client has been defined to constitute the gross amount charged by such agent from the client for services rendered in any manner in relation to import or export of goods. The service tax is chargeable at the rate of 5% on the value of the taxable service. 2.3 The service rendered by the custom house agent are not merely limited to the clearing of the import and export consignment. The CHA also renders the service of loading/unloading of import or export goods from/at the premises of the exporter/importer. The packing weighment; measurement of the export good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The custom house agents, may be advised to show the service charges as 15% of the such lump sum amount of the bills. Service tax of 5% will be chargeable on the above 15%. 2.6 Sometimes CHAs sub-contract their work to CHAs located in other stations. In such cases, it is possible that the sub-contracting CHA raises the bill on the main CHA who inturn raises the bill to the client. It has been decided that in such cases, the sub-contracting CHA will not be required to pay service tax on the bills raised by him on the main CHA. The service tax will be payable by the CHA who provides the actual service to the client and raises the bill to the client. 2.7 A CHA may have various branch offices located at different stations but all these branch offices do not raise the bills and only the main or central office will be raising the bills. In such cases, only the central office should be registered with the Deptt. The Commissioners of Central Excise may verify any such contention and allow the payment to be made by Head Office. 2.8 Sometimes, the bills raised by the CHA are not entirely paid by the client and the CHA is forced to give discounts. In such cases where the final bill rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the Revenue laboured hard to show that an amount of Rs. 1,95,48,135/- would come under the category of Cargo handling Services and the said amount is not time-barred. This Bench, in a similar case, in the case of Shri Ganesh Shipping Agency v. CCE, Mangalore had taken a view that once the applicant discharges Service Tax liability at 15% of the gross receipts in terms of the Public Notice, then the balance amount cannot be subjected to Service tax under other categories. This view has been taken in the Stay Order Nos. 1144 and 1145/2008 dated 24-11-2008. Moreover, we want to record that the impugned order of the Commissioner lacks clarity for the following reasons although the Special Counsel for the Revenue would insist otherwise. In para 64, the Commissioner has given a summary of his findings on the legal issue regarding Port Services. The said para is reproduced below :- "64. Before concluding, it may be necessary to summarize the findings on the legal issue regarding 'Port Services'. As per Section 65(82) of the Act, "Port Services" means any service rendered by a port or other port or any person authorized by such port or other port, in any manner, in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. (i) Cargo handling Services (ii) Port Services (iii) Transportation services (iv) CHA services. When that is the case, the Commissioner ought to have given the split up figures so that it would be clear to the applicants as well as to others as to the exact amount he would be demanding under the different categories. However, such an exercise has not been done. In any case, in the Ganesh Shipping case, on a similar issue, we had taken a view that once the applicant discharges Service Tax on 15% gross amount, then the balance amount cannot be subjected to Service Tax under different categories. Moreover, on limitation also, in our view, Revenue does not have a strong case. Even when the Joint Commissioner adjudicated the case, the Department was very well aware of the activities of the applicants. There was also correspondence between the applicants and the Department. Hence, suppression of facts cannot be alleged. Had the department felt that payment of service tax on 15% of the gross value is not in order, then they could have issued the Show Cause Notices within the normal period. This has not been done. The learned Special Counsel has attempted to show that the enti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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