ST - Mere reading of invoices and challans by appellant (octroi agent) for purpose of filling up form and obtaining clearance at check post does not amount to 'dealing with or handling documents of title' - demand under BAS not sustainable - Appeal allowed: CESTAT
By TIOL News Service
MUMBAI, AUG 14, 2015: THE appellant is an Octroi Clearing Agent having a licence issued by the Bombay Municipal Corporation.
The nature of business is that when the goods arrive at the check post or Octroi post the appellant facilitates in payment of Octroi by filling up various forms and presenting the same before the Octroi authorities for the correct determination of the amount of Octroi. Thereafter they deposit the amount of Octroi on behalf of the client and obtain clearance under the Octroi Act, which facilitates the goods of the clients to cross over into the city of Mumbai. Further, Octroi is chargeable even in case of stock transfer of goods. The appellant raised invoices on their clients, which is normally 2.5% of the amount of octroi assessed. A service charge is also charged @ Rs.50/- per vehicle.
Revenue held the view that the said services provided by the appellant are classifiable under head "Business Auxiliary Service”.
A SCN was issued to the appellant for the period from October 2004 to March 2007 stating therein that they have received an amount of Rs.9,63,576/- for the services provided to M/s. Lubrizol India Ltd. , being the amount paid @ 2.5% by way of service charges of the Octroi amount and on the same service tax of Rs.1,09,715/- is payable along with penalty and interest.
In adjudication, a demand of Rs.87,393/- was confirmed by taking a view that levy under "Business Auxiliary Service"as "Commission agent"was with effect from 16/06/2005 when it was included under the taxable category by defining the same as any person, who deals with the goods or services or documents of title to such goods or services. Penalty was levied for an amount of Rs.90,000/- u/s 78 but no penalty was imposed u/ss 76, 77.
As the Commissioner(A) rejected the appeal of the Octroi clearing agent, they are before the CESTAT.
The appellant submitted that they are not providing any service in the nature of "Business Auxiliary Service" as defined u/s 65(19) of the FA, 1994; that for the purpose of obtaining clearance under octroi provisions, they are simply required to read the documents of title, being the invoices or challans, have to fill up the forms, for the purpose of assessment of the octroi amount and which does not amount to handling of documents. Further, they have no authority from their principal to handle the documents of title, as they cannot make any endorsement on the documents. Reliance is also placed on the decision in United Telecoms Ltd. - 2011-TIOL-56-CESTAT-BANG wherein it is held that no demand can be confirmed against any person towards service tax liability unless the sub-clause is specified. Inasmuch as since in the SCN issued to them demanding ST under BAS no sub-clause to section 65(19) is mentioned, the demand is fit to be set aside on this ground also.
The AR reiterated the findings of the Commissioner (Appeals) with regards to the term "deal with"and prayed that the appeal be rejected. Reliance is also placed on the decision in MSC Agency (India) Pvt. Ltd. 2014-TIOL-1043-CESTAT-MUM where itis held that merely because the particular sub-clause of Section 65 (19) has not been specifically mentioned in the SCN, it does not vitiate the show-cause notice or the proceedings initiated thereunder.
The Bench after considering the submissions observed -
"…we hold that mere reading of the invoices and the challans by the appellant, (the octroi agent) for the purpose of filling up the form and obtaining clearance at the check post, does not amounts to dealing with or handling the documents of title. One can in the normal commercial term "dealing with the title"is possible when a person having authority to transfer the title of such documents. Wherein in the present case it is an admitted fact that the appellant does not have any authority to transfer the title and as such, the mere reading of the documents for the purpose of clearance of octroi does not amounts to dealing with or the handling of documents of title of the goods. Thus, we hold that the learned Commissioner has erred in holding that the appellants have handled or are handling the documents of title…."
The order was set aside & the appeal was allowed with consequential benefits.
(See 2015-TIOL-1697-CESTAT-MUM)
