By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Stay – Taxability of ocean freight collected by multi-modal transporter – whether ‘reimbursement of expenditure while provoding Business Support Service’ or ‘Business Auxiliary Services’ – Held – neither reply to SCN nor OIO provide a clear picture of activity – ordered pre-deposit of part amount.
Facts:
The appellant, a multi-modal transporter, charged service tax under heads like terminal handling, bill of lading, agency charges etc., and diligently discharged the same under the category of “Business Support Services”. They also collected ocean freight on which no service tax was paid. The department contended to levy tax on the same considering it as reimbursable expenditure and thus issued SCN and demanded tax on such value of ocean freight under the category of “Business Support Service” which the adjudicating authority confirmed under the category “Business Auxiliary Service”.
Relying on the decision of O.K. Play (India) Ltd. 2005 (180) ELT 300 (SC), the department contended that the said service was rightly classified under “Business Auxiliary Service” and further relied on Leaap International Pvt. Ltd. which ordered a pre-deposit in a similar case under the category “Business Auxiliary Service”.
The appellant contended that 1) the order of the Adjudicating Authority was beyond the scope of the SCN, 2) there was no taxing entry under the Finance Act, and 3) Rule 5 of the Service Tax (Determination of Valuation) Rules, 2006 was struck down in the case of Intercontinental Consultants and Technocrafts Pvt. Ltd. and thus no demand was warranted.
Held:
Referring to the submissions made by the appellant, the Hon. Tribunal stated that the reply to the SCN and order-in-original did not provide a clear picture of the activity and thus ordered a pre-deposit of part amount.
(Note: The Hon. Tribunals, on similar facts, allowed the appeal in Interocean Shipping Company vs. CST, Delhi (2012) 28 Taxamann. com 238 (New Delhi – CESTAT); remanded the matter in Agility Logistics Pvt. Ltd. vs. CST–30 Taxmann.com 382 (Chennai– CESTAT); and granted full waiver of pre-deposit in M/s. Freight Systems Pvt. Ltd vs. CST, Chennai 2012-TIOL-1558-CESTAT-Mad).
