By TIOL News Service

MUMBAI, APRIL 06, 2018: SERVICE Tax demand of Rs.7,21,116/- has been confirmed against the appellant along with interest and penalties on the finding that they have rendered ‘Business Auxiliary services' to M/s Jawaharlal Nehru Port Trust, taxable under section 65(105)(zzb) of Finance Act, 1994.

Before the CESTAT, the appellant submits that despite depositing the tax amount during investigation they challenge the taxability as they do not provide any taxable service and that the lower authorities have not isolated the relevant aspect of ‘Business Auxiliary service' applicable to them from among those enumerated in section 65(19) of Finance Act, 1994.

Reliance is placed on the decision of the Tribunal in the case of Golden Handling Works 2017-TIOL-3957-CESTAT-DEL [para 7 refers] wherein it is held that without specifying the category of tax liability under BAS the proposal in the SCN is vague and cannot sustain.

The AR submitted that the appellant had been rendering services to vessels without which the safety of the cargo and vessel would be compromised and, therefore, the lower authorities are correct in holding the activity to be taxable and in classifying the service as ‘business auxiliary service'.

The Bench observed thus -

“4. The decision of the Tribunal in re Golden Handling Works is categorical in requiring the assessing authority to determine the specific characteristic of the service which is a necessary pre-requisite for fastening liability. We also find that the Port Trust has engaged the services of the appellant and that appellant is in receipt of consideration from the Port Trust. In these circumstances, the existence of third party in transaction, which is a necessary element for coverage under section 65(105)(zzb) read with section 65(19) of Finance Act, 1994 is questionable…”

The order was set aside and the appeal was allowed.

(See 2018-TIOL-1099-CESTAT-MUM)