CESTAT Sets Aside Service Tax Demand on Fixed Facility Charges, allows Inox Air Products Appeal [Read Order]
Since the appellant was already discharging excise duty on these charges, and the Board Circular is binding on the department, the FFC could not be treated as consideration for a separate 'Supply of Tangible Goods Service'.
Service-tax-demand-Taxscan
Service-tax-demand-Taxscan
Recently, the Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed an appeal, holding that service tax is not leviable on 'Fixed Facility Charges' (FFC) when excise duty has already been paid on them, as per a specific Board Circular.
The assessee, M/s Inox Air Products Private Ltd. filed an appeal against an Order-in-Appeal dated 21.12.2015. The appeal challenged the confirmation of a demand for service tax on FFC charges for the period from April 2012 to March 2013. The department's demand for service tax on FFC charges. These charges were for providing Vacuum Insulated Storage Tanks (VIST) at the customers' premises for storing liquid gases. The department classified this as a 'Supply of Tangible Goods Service', arguing that the transfer of effective possession and control over the tanks was absent.
The appellant argued that the storage tanks were in the physical possession and control of the customers and, crucially, that excise duty had already been paid on the FFC charges, making a separate levy of service tax impermissible.
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The department's Authorized Representative supported the lower order, which had upheld the demand, contending that since the transfer of 'effective possession and control' over the tanks was absent, it constituted a taxable service.
The CESTAT bench, comprising Mr. P. Dinesha (Judicial Member) and Mr. Vasa Seshagiri Rao (Technical Member), found merit in the appellant's contention. The tribunal relied heavily on a Board Circular dated 10.11.2014, which had clarified that FFC charges are to be included in the assessable value for the payment of Central Excise duty.
The tribunal noted that since the appellant was already discharging excise duty on these charges, and the Board Circular is binding on the department, the FFC could not be treated as consideration for a separate 'Supply of Tangible Goods Service'. This position had been affirmed by the tribunal in the appellant's own case for an earlier period.
Accordingly, the CESTAT set aside the Order-in-Appeal and allowed the appeal, granting consequential relief to the appellant.
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