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January 2013

2012 (28) STR 362 (Tri.-Del.) Ashok Agarwal vs. Commissioner Of Central Excise, Jaipur – I

By Puloma Dalal, Jayesh Gogri, Chartered Accountants
Reading Time 2 mins
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If the assessee did tax planning, extended period of limitation cannot be invoked.

Facts:

The appellant, a clearing and forwarding agent for M/s. Chambal Fertilisers & Chemicals Ltd. (‘CFCL’) also had separate contract with CFCL for giving their godown on rent for the goods for which they acted as clearing and forwarding agent. Service tax was demanded on godown rent under “storage and warehousing services”. According to the appellant, the godown rent was in the form of reimbursements and as per CBEC clarification, it was not leviable to service tax. Further, the nature of services of the appellants was “clearing and forwarding agent” as against “storage and warehousing services” and that the department issued SCN under the category of storage and warehousing services and the demand was confirmed under “clearing and forwarding agent” and therefore, the order travelled beyond the scope of SCN. According to revenue, the services of clearing and forwarding could not have been performed without storage space and the cost of storage space was integral part of value of services provided. Further, the separate contract for rent was for the purpose of reduction of tax incidence. Since the contract was hidden, there was suppression of facts and therefore, extended period was invoked.

Held:

There was a legal infirmity that tax was demanded under a different category from the one mentioned in SCN. Viewing the case as one of tax planning rather than tax evasion, extended period of limitation was held not justified and appeal was dismissed.

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