Service Tax – If dispute involved was of technical nature then penalty not imposable

As regards terminal charges on export cargo, we find that these activities are undertaken in relation to storage of baggage and export cargo. These charges are correctly includible in the value taxable under “Storage and Warehousing.”

As regards the charges collected @20 paise per kg for facilitating X-raying of cargo by customer airlines at the premises of the appellants, we find that the activity would be taxable under renting of immovable property. KSIE pays service tax on renting of space. These charges @ 20 paise per Kg is collected only for providing air-conditioned space where the customer airlines install and operate their x-ray machines. Therefore, the demand in respect of this activity is in order as short payment of tax on renting of immovable property. We uphold this demand confirmed against KSIE.

The assessee did not file ST-3 returns declaring the correct taxable value as prescribed. We find that the Joint Commissioner had held that the assessee was not liable to pay service tax on demurrage and handling charges with respect to export cargo/baggage in appellants’ own case. The Commissioner has refrained from confirming the demand for extended period. The circumstances clearly show that the appellant had not attempted to evade service tax due. Moreover, the liabilities confirmed followed interpretation of provisions which could also accommodate the view held by the appellants. We find that the appellants were not guilty of contumacious conduct and had not acted in defiance of statutory provisions with intention to evade service tax. We find that the Apex Court in the case of Hindustan Steel Ltd., Vs State of Orissa [1978(2) ELT(J159)SC] has held that in the absence of malafide conduct, on the part of the assessee, it is not necessary to impose penalty on a person, even if the statute provides for the same. In the circumstances, we remand the penal liability of the appellant under Section 76 of the Act to the adjudicated afresh considering the provisions of Section 80 of the Act. The appeal is otherwise rejected.

 IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, BANGALORE

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