Commissioner of Customs Vs Awasthi Brother (CESTAT Delhi)
The Revenue challenged Order-in-Appeal No. IND-EXCUS-000-APP-123-124-19-20 dated 30.08.2019, by which the Commissioner (Appeals) had set aside the service tax demand of Rs. 1,30,31,922/- and consequently the related interest and penalties. The appellant was registered for Clearing and Forwarding Agent Services. During audit for the period 2012-13 to 2016-17, the department alleged that, apart from C&F services, the appellant arranged transportation services for its principal companies and received consideration exceeding the expenses incurred, resulting in short payment of service tax.
A show cause notice dated 27.07.2018 proposed recovery of service tax of Rs. 1,30,31,922/- under Section 73(1) of the Finance Act, 1994, along with interest under Section 75 and penalties under Sections 77 and 78. The adjudicating authority confirmed the demand, ordered recovery of interest, imposed a penalty of Rs. 10,000/- under Section 77 and a penalty of Rs. 65,15,960/- under Section 78.
The Commissioner (Appeals), however, found that the appellant was providing C&F services and transportation services as distinct activities. Although both activities were covered by the same contract, separate rates had been agreed for them and separate invoices were issued for transportation charges. The transportation activity was undertaken by the appellant using its own trucks or hired trucks, and consignment notes were issued in each case. The Commissioner (Appeals) therefore concluded that the transportation service was not part of the C&F Agent service.
