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Various charges collected by Steamer Agent from the importers/exporters of goods under different names are liable to service tax under Business Auxiliary Services with effect from 10-09-2014.
Facts:
Appellant registered under “steamer agency” also collected service charges from importers and exporters for various other services rendered in respect of the import/export cargo handled by appellant. Such services included; bill of lading fees; LCL consolidation charges; amendment charges for amendments in the bill of lading; facilitation/processing charges; administration charges for stamp duty; delivery order fees for taking delivery of cargo; documentation fees for export to USA; hazardous documentation charges for taking special care of hazardous cargo; bill of lading surrender charges; manifest correction charges; and detention waiver/refund processing charges. Appellant did not charge service tax on such service charges. According to department, these services merit classification under “Business Auxiliary Service” (‘BAS’). The Appellant contended that such other services cannot be taxed under BAS, since BAS encompasses services only when the same is rendered on behalf of another person, and services in the present case are not rendered on behalf of shipping lines.
Held:
The Hon’ble Tribunal analysed the scope of BAS u/s. 65(19) and held that the activities undertaken by the appellant for which service charges are collected are in respect of cargo imported or exported by their customers. Thus, these services were in relation to “procurement of goods or services, which are inputs for the client” and such services clearly fall under sub-Clause (iv) of section 65 (19) as it stood with effect from 10-09-2004. Even if it is held that these activities did not fall under sub-Clause (iv), they would certainly fall under sub-Clause (vii) namely “any service incidental or auxiliary to any activity specified in sub-Clauses (i) to (vi).” Even if the appellant had acted as a commission agent as claimed by them, they would fall under sub-Clause (vii) of Clause (19) of section 65 as the entry covered the services rendered as a commission agent.
The Tribunal further held that the contention of the appellant that to attract BAS, there should be 3 parties and the service should have been rendered “on behalf of the client”, is an incorrect argument. Rendering of service on behalf of the client applies only to sub-Clauses (iii), (v) and (vi) which relate to customer care management, production of goods and provision of services. The said condition does not apply to other sub-Clauses, including sub-Clause (iv) which is applicable in the present case. While upholding the invocation of extended period, Tribunal considered the fact that the appellant is service tax assessee since 1997 onwards and when the scope of BAS was expanded in the Budget 2004 and explained in the Circular, the appellant chose to ignore this circular, not taking reasonable precautions. Penalties u/s. 76, 77 and 78 were also upheld. However, for the period 10-05-2008 onward, only penalty u/s. 78 was held leviable in view of the amendment made in the said section vide Finance Act, 2008.
