INTERNATIONAL CLEARING AND Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THE lower authorities have demanded two amounts of Service Tax viz., Rs. 7,46,872/ - and Rs. 31,27,201/ -, from the appellants for the period Sept.'97 to Mar.'02. According to the authorities, the assessee is liable to pay the above tax amounts qua CHA and qua steamer agent respectively. The demands are based on balance sheets which indicated certain amounts of "operational surplus", which were treated by the Service Tax authorities as consideration for taxable service offered by the assessee to their clients. According to the assessee, these amounts reflected the 'profit' earned by them in relation to certain sundry jobs done by them on behalf of their clients, the actual expenses whereof where reimbursed by the clients. This contention was not accepted by the Service Tax authorities. Hence this dispute.

(2.) AFTER hearing both sides and considering their submissions, we find that the above issue is fairly arguable. Both sides agree that there is no judicial precedent on the issue. Ld. Counsel however has made an endeavour to draw support from the Supreme Courts judgment in Baroda Electric Meters v. Collector , wherein the profit earned by the assessee in connection with freight for the subject goods was held not includible in the assessable value of the goods. Ld. SDR referring to Service Tax provisions, disputes the applicability of the decisions cited by ld. Counsel. Her emphasis is on the definition of the relevant service under Section 67 of the Finance Act, 1994. It is submitted that the taxable amount for the purpose of levy of Service tax has a different connotation vis -a -vis., assessable value of excisable goods, the former being the gross amount collected by the Service Tax provider from his client in relation to the service rendered. Prima facie, ld. SDR's argument has some force. Apart from this, we find that, in the instant case, the basic question to be looked into is whether the so -called operational surpluses were collected by the assessee qua steamer agent for service rendered in any manner in relation to ship's husbandly or despatch or any administrative work related thereto. According to the Department, the above amounts were collected in relation to administrative work related to ship's husbandly or despatch. We shall address this issue in detail at final hearing stage. For the present purpose, no strong prima facie case having been made out by the appellants, we are of the view that they should deposit about 25% of the total amount of tax demanded. Accordingly, we direct them to predeposit Rs. 10 lakhs (Rupees Ten lakhs) within 6 weeks and report compliance on 23.02.2006.