The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad consisting of Anil Choudhary (Judicial Member) and A.K. Jyotishi (Technical Member) ruled that service tax is not chargeable on charges collected towards reimbursement of fuel, water & other consumables.
ISSUE RAISED
Whether the appellant is liable to pay service tax towards charges collected towards reimbursement of fuel, water & other consumables?
BACKGROUND
As per the Agreement/Charter Party, a copy of which is annexed in the appeal paper book, hire charges are payable separately excluding the consumables, port and agency charges, taxes, licenses, permits, etc. The collection of such amounts towards fuel, consumables is by way of sale, and cannot form part of service.
RULING
The CESTAT relied on appellant in their own case by which it was held, “Once the demand is found not tenable the attendant interest and penalties imposed are redundant. I find strength in the appellant’s argument, hence I am constrained to differ from the lower authority’s decision and I find the confirmation of tax demand along with attendant interest and imposition of penalties is legally unsustainable.”
Case Title: Chandra Ship Management Pvt Ltd Versus The Commissioner of Central Excise Customs & Service Tax
Citation: Service Tax Appeal No. 21045 of 2015