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Judgment
Challan No. & Date,,Amount (Rs.)
2420 Dt. 5 June 2012,,"1,63,83,831.00
2427 Dt. 5 June 2012,,"3,09,661.00
00255 Dt. 5 July 2012,,"4,232.00
Heard both sides through video conferencing and perused the appeal records.,,
We find that the crux of the issue before us relates to refund of service tax inadvertently paid by the Appellant on ship broking services availed,,
from outside India during the relevant period under the taxable category “Business Auxiliary Serviceâ€, on a reverse charge basis. Since the refund",,
claim is premised on the decision of the Tribunal in the Inter Ocean case (supra) it is imperative to analyze the said decision. In the said case, the main",,
point of dispute was the classification of the services of a ship broker as evident from para 1.1 set out below.,,
“The period of dispute in these appeals is from October 2003 to September 2009 and the main point of dispute is the classification of the,,
service. While according to the Department, the appellant ‘s activity is akin to that of a Commission agent and is taxable as “Business",,
Auxiliary Service†under Section 65(105)(zzb) read with Section 65(19)(vii) of the Finance Act, 1994, according to the appellants, they",,
being essentially a broker, cannot be treated as “Commission agent†and hence their service is neither taxable under Section 65(105)",,
(zzb) nor under any other clause of Section 65(105).â€,,
The Tribunal after analyzing the distinction between a Commission Agent vis-Ã -vis the ship broker came to the conclusion that ship broker services,,
could not be equated with a Commission Agent and therefore, not covered by the definition of “Business Auxiliary Services†as evident from para",,
10 & 11.1, extracted below:",,
“10. A ship broker, as the name itself suggests, is essentially a broker. Ship brokers are specialist intermediaries for negotiations",,
between ship owner and charterers who use the ship to transport some cargo or between the buyers and sellers of the ship. A ship broker,,
bring together a ship owner who wants employment/fixture for his ship located at a particular Port and ship charterer who requires a,,
particular type of ship at or around a particular Port to transport some cargo. They help in negotiating the terms of the charter and,,
finalization of charter - party agreement and also assist both the parties in compliance of the charter - party terms and full and final,,
settlement of all the dues and claims. The ship broker also acts as an intermediary for bringing together a ship owner who wants to sell his,,
ship and the prospective buyer and assisting in sale of the ship. For providing these services, the ship brokers have to maintain database of",,
ship owners, the class of ships owned by them and their location. It is not the case of the Department that the appellants have agreements",,
with shipping companies etc. for representing them in negotiations. The essential ingredient of a ‘Commission agents’ service is,,
acting on behalf of a principal which is missing in the case of the appellants. From the nature of their activity it is clear that brokers are,,
purely intermediaries who do not act on behalf of either ship owner or the charterer and, therefore, they cannot be said to be commission",,
agents.,,
11.1 In our view, the above judgment of Hon‘ble Nagpur High Court is squarely applicable to the facts of this case and the appellants",,
while acting as ship brokers cannot be called commission agents of the ship owner or ship charterer and thus are not covered by the,,
definition of “Business Auxiliary Serviceâ€.,,
Although, an alternate contention with respect to export of ship broking services was advanced by the Appellant therein, the same was not even gone",,
into since the main issue itself stood decided in favour of the Appellant therein as is evident from para 1.2, 6 & 12 of the said decision. Further, an",,
appeal filed by the department against the said decision before the Hon’ble Supreme Court has also been rejected both on merits as well as on,,
limitation â€" 2015 (40) STR 210. Therefore, the issue as regards non-taxability of ship broking services under the taxable category “business",,
auxiliary services†is no more res integra. Since the nature of services in the instant case being that of a ship broker is not in dispute, we are in",,
agreement with the contentions of the Appellant that such ship broking services could not be taxed under the category “business auxiliary,,
services†and the revenue’s contention that the Inter Ocean case did not deal with taxability or exemption in case of import of ship broker,,
services does not hold any ground.,,
We agree with Revenue that the Inter Ocean case (supra) does not exclude the taxability of ship broking services under any other taxable,,
category. However, the period involved in the proceedings before us is prior to 1 July 2012 when only specified services were taxable, and the onus",,
was entirely upon the Revenue to prove classification and taxability of ship broking services under any other taxable category as held by the Tribunal,,
in Jetlite (India) case at para 88 thereof as well as in Dilip Kumar case (supra). No negative inference could be drawn merely from the fact that ship,,
broker services does not appear in Section 66D of the negative list introduced with effect from 1 July 2012 whereby all services were made taxable,",,
unless exempted. We find that instead of discharging the burden of correctly classifying and establishing taxability of ship broking services under a,,
particular taxable category by putting the Appellant to notice, the Revenue has on the contrary sought to shift this burden upon the Appellant as the",,
Notice dated 30 October 2014 did not even propose classification of ship broking services under any other taxable category. There is considerable,,
force in the submission of the Appellant that in the absence of any particular classification proposed in the Show-cause Notice, the Ld. Appellate",,
Commissioner could not have alleged that ship broking services were taxable as “Business Support Servicesâ€. We are inclined to follow the,,
decision of the Tribunal in Sainik Mining case (supra), that classification of services under a taxable category not alleged in the Show-cause Notice",,
cannot be concluded to support the levy of tax as held in para 11,set out below:",,
(11) Now coming to the activities for the period beyond 1-6-2007 till 31-3-2008, it is observed that though the activities of appellant are no",,
doubt the mining activities but it is observed from the impugned Show Cause Notice that the same has not been so alleged. In Show Cause,,
Notice, the Department has alleged the said activity as that of site clearance. In such circumstances, the principle is well settled that the",,
classification of taxable service which is not alleged in the Show Cause Notice cannot be concluded to support levy of tax ‘ The,,
Adjudicating Authority vide the impugned order has also held the entire activity to be classifiable under mining services. But those findings,,
are contrary to the Show Cause Notice and as such are not sustainable. We draw our support from adjudicatin of Hon‘ble Supreme,,
Court in the case of Caprihans India Ltd. v. CCE, 2017 (51) S.T.R. 239 (S.C.) wherein it was held that the order holding different",,
process/the activity as other than the one mentioned in the Show Cause Notice is liable to be set aside on this ground alone. Hence, it is now",,
settled that the classification which is not proposed in Show Cause Notice, the same cannot be concluded. For the said reason, the Order",,
under challenge is held to suffer infirmity and is accordingly, set aside.â€",,
In so far as the aspect of unjust enrichment is concerned, we find that the Appellant had adduced a Certificate from a Chartered Accountant",,
certifying the non-availment of credit of the service tax alleged to have been paid mistakenly under the category “Business Auxiliary Services†as,,
also regarding the incidence of tax having not been passed on to any other person. There is merit in the contention of the Appellant that the Certificate,,
of an expert cannot be discarded unless a contrary opinion has been expressed by another expert. Moreover, as directed by the Bench, the Appellant",,
had also produced a copy of the latest Audited Annual Report for the Year 2020-21 wherefrom it is evident that the claimed amount of,,
Rs.1,66,97,724/- is being carried as a receivable in the books of accounts of M/s. Chambal Fertilizer and Chemicals Limited, of which the Appellant is",,
a division. Therefore, the findings of the appellate authority as regards the CA Certificate dated 25 March 2015 being not a conclusive proof of the",,
incidence of tax not having been passed on by the Appellant to any other person also cannot be accepted.,,
In view of the above discussions, the impugned order cannot be sustained and accordingly, the same is set aside.",,
In the result, the appeal is allowed with consequential relief, if any.",,
(Pronounced in the open court on 03.12.2021),,