Relief to FCI: CESTAT quashes Demand of Service Tax Imposed on Weighment Charges on ground of Non-falling of Service under ‘BAS’ [Read Order]

The Chandigarh bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the demand of the service tax imposed on the weighment charges on the ground of non-falling of the service rendered by the assessee under the category of business auxiliary service. The Court granted relief to the Food Corporation of India (FCI) by quashing the demand for service tax. 

The Food Corporation of India, the appellant assessee causes the weight of the trucks irrespective of whether or not the trucks were weighed earlier by their suppliers or not; the assessee deducts charges, for such weighment, in the payments made to the agencies, supplying grain. 

The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand of service tax along with the penalty and interest on the ground of the weighment charges, collected by the assessee from their customers, charges constitute the consideration for the “Business Auxiliary Service”. 

Sunil Kumar Mukhi, the counsel for the assessee contended that the show cause notice does not specify under which clause of “Business Auxiliary Service” Clauses (i) to (vii), the activity undertaken by the assessee falls. 

Further submitted that the assessee did not render any service to their customers; they did not receive any consideration for any service and the deduction was on account of recovery of weighing charges and as such it cannot be called as remuneration for any service. 

Ravinder Jangu, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee rendered services which fall under business auxiliary services and the demand raised by the department was as per the law and liable to be sustained. 

The Bench observed that the revenue did not produce any evidence to show that there was an agreement or an understanding between the assessee and their customers for the rendering of any service and there was no agreement on any consideration and it cannot be said that the weight was a service, leave alone Business Auxiliary Service and the deduction of weighing charges was not a consideration towards any service rendered. 

The two-member bench comprising S.S. Garg (Judicial) and Anjani Kumar (Technical) quashed the demand for service tax along with penalty and interest while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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