Case Law Details

Case Name : M/s Rajasthan State Warehousing Cotp Vs CCE (CESTAT Delhi)
Appeal Number : ST/Misc No. 197/2010
Date of Judgement/Order : 17/03/2011
Related Assessment Year :

As per clause (zr) of section 65(105), service tax is leviable on “any service provided to any person, by a cargo handling agency in relation to cargo handling service”. The argument of the Appellant is that they could never understand that they were a “cargo handling agency” because they are in the business of warehousing of goods for which they were already paying service tax. This was a service provided by the contractors and the charges were recovered from the customers who use such services. But as a corporation owned by the Rajasthan State they did not want to enter into dispute on this issue with the Union of India and as soon as the issue was pointed out to them they started paying tax for the charges collected by them and paid to their contractor who was providing the service. In this proceeding they are not contesting the merits of the issue. Their only contest is that they had no intention of evading any tax. Since there was no intention to evade tax, they argue that the demand invoking the extended period of time is not maintainable.

Considering the status of the Appellant as a Public Sector Undertaking and their conduct after the matter has been pointed out to them and the fact that the audit by the department on previous occasions did not point out this issue though they were collecting charges during such period also, we are satisfied that this Appellant did not have any intention to evade the impugned tax. Therefore the demand will be sustainable only to the extent of demand covered by the normal period of time of one year. Interest under section 75 is to be paid on the sustainable portion of the demand. Penalty under section 76 will be maintainable in respect of the period within normal period. Penalty under section 78 will not be maintainable.

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI

COURT NO.IV

ST/Misc No. 197/2010
ST/Appeal No. 23/2007

Arising out of Order-in-Original No.10/JPR-1/06 Dated: 2.11.2006
Passed by the Commissioner of Central Excise, Jaipur-I

Date of Decision: 17.3.2011

M/s RAJASTHAN STATE WAREHOUSING CORP

Vs

CCE, JAIPUR

MISC ORDER NO.ST/58/2011
FINAL ORDER NO.ST/106/2011

Per: Mathew John:

Appellant is a public sector undertaking engaged in the business of warehousing fertilizer and other items. They were registered with Service Tax Authorities for payment of tax on “Storage and Warehousing” charges.

2. During the examination of records of the Appellant during audit conducted by the service tax authorities, it was observed that the Appellant were recovering supervising charges from their customers. These charges were being collected by them from their customers at a certain percentage of handling and transportation charges for which they were raising bills to their customers. They were paying such handling and transportation charges to the handling and transportation contractors appointed by them. It appeared that they have to pay service tax on such (Handling and transportation charges as also supervision charges) charges/under “Cargo Handling Service”. As soon as the issue was pointed out to them by the department, during audit they started paying tax on such services also.

3. They were issued with a Show Cause Notice dated 25-07-2006 demanding tax on “Cargo Handling Service” rendered during the past, invoking the extended period of time specified in section 73 of Finance Act, 1994. Penalties under various sections of Finance Act 1994 also were proposed.

4. The SCN was adjudicated by order No.1O/JPR-I/2006 Service Tax dated 30-10-2006 confirming tax amounting to Rs.79,43,447/-. Interest as applicable under section 75 of the Act was demanded. Penalties were imposed under sections 76 and 78 of the Finance Act, 1994.

5. As per clause (zr) of section 65(105), service tax is leviable on “any service provided to any person, by a cargo handling agency in relation to cargo handling service”. The argument of the Appellant is that they could never understand that they were a “cargo handling agency” because they are in the business of warehousing of goods for which they were already paying service tax. This was a service provided by the contractors and the charges were recovered from the customers who use such services. But as a corporation owned by the Rajasthan State they did not want to enter into dispute on this issue with the Union of India and as soon as the issue was pointed out to them they started paying tax for the charges collected by them and paid to their contractor who was providing the service. In this proceeding they are not contesting the merits of the issue. Their only contest is that they had no intention of evading any tax. Since there was no intention to evade tax, they argue that the demand invoking the extended period of time is not maintainable.

6. Considering the status of the Appellant as a Public Sector Undertaking and their conduct after the matter has been pointed out to them and the fact that the audit by the department on previous occasions did not point out this issue though they were collecting charges during such period also, we are satisfied that this Appellant did not have any intention to evade the impugned tax. Therefore the demand will be sustainable only to the extent of demand covered by the normal period of time of one year. Interest under section 75 is to be paid on the sustainable portion of the demand. Penalty under section 76 will be maintainable in respect of the period within normal period. Penalty under section 78 will not be maintainable.

7. The Appeal is disposed of accordingly.

NF

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