MOT for export supervision – Is the Central Excise department liable to pay Service Tax?
A netizen asked us, “Kindly enlighten us as to whether Merchant Overtime Fee collected by Range Superintendent for supervising stuffing of export consignment is liable to service tax or not”.
Customs and excise officers realize a fee for physical supervision and sealing of export cargo. The exporter has an option of not getting them supervised by the officers and for the service provided by the department, a fee is collected and this is normally known as Merchant Over Time (MOT). Now is Service Tax payable by the department on this service?
As per Section 65 (105) (zzzq) "taxable service" means any service provided or to be provided -
to any person, by any other person, in relation to ' support services of business or commerce, in any manner;
As per Clause 104(c),
"support services of business or commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing.
So services provided in relation to business or commerce by any person to any other person is taxable. Therefore the service of supervision of export cargo is in relation to business and commerce, is liable for tax. Are we going to have one wing of the department issuing Show Cause Notices to the other wing to pay Service Tax?
Another netizen could not wait for a clarification through these columns; he made a frantic call and asked, “ As an employee of the company I work for, I am providing a service to my employer in relation to business and commerce; Am I liable to pay Service Tax?”
Will the Board clarify?