Facts
The appellant, M/s. International Seaport Dredging Private Ltd., are engaged in providing Dredging Service. They are registered with the service tax Commissionerate and subsequently obtained centralized registration.
During the course of the audit, it was noted by the Department that appellant had not paid Service Tax on Dredging Services provided to Dredging Corporation of India (DCI) for Sethu Samudram Project and Dhamra Port Company Ltd., and also on certain services imported by them.
Show Cause Notices for the different periods were issued to demand Service Tax on amounts received for Soil Stabilisation and Land Reclamation Services as Dredging Services, Charter-hire charges as Dredging Services, Maintenance and Repair Services, Man Power Recruitment and Supply Agency Services and other services. After due process of law, the authorities below confirmed the demand on the above and dropped all other issues.
Submissions
Advocate Raghavan Ramabadran appearing for the appellant, submitted that the issues with regard to demand of Service Tax on (a) Soil Stabilisation and Reclamation Services treated as Dredging Services (b) Supply of Dredgers treated as Dredging Service (c) Maintenance and Repair Service received for repair of vessel from foreign service provider have already been considered by the Tribunal in the appellants own case and decided in favour of appellant as reported in International Seaport Dredging Ltd. vs. Commissioner of Service Tax, Chennai.
Authorised Representative Anandalakshmi Ganeshram appearing for the Department submitted that the main crux of argument was in respect of the demand of Service Tax under MRSA.
She submitted that the appellant‟s contention that manpower supplied by the non-resident service providers were absorbed as their own employees and only the payment to the employees was routed through the overseas service providers (M/s. N.V. Baggerwerken Decloedt and M/s. Bellsca Investments Ltd., Cyprus (Bellsee)) and that no service was involved as per the secondment agreement cannot be accepted. On a perusal of this agreement it can be seen that the appellant has requested Bellsea to depute the secondees for agreed tenure and the secondees shall resume their services with Bellsea upon completion of the secondment.
Decision
The division bench of Sulekha Beevi C.S., Member (Judicial) and Vasa Seshagiri Rao, Member (Technical) viewed that the demand of Service Tax under the category of dredging services for the amount received by the appellant for soil stabilisation and land reclamation services cannot be sustained and required to be set aside.
The bench noted that the repair services were done outside India. The levy of Service Tax on Maintenance and Repair Services is on the basis of the place of performance and therefore the demand cannot be sustained as the services have been performed outside India and not received in India.
“The Ld. counsel has argued to set aside the penalties. We have already held that only the demand under MRSA survives. The said issue was interpretational in nature and has travelled upto to the Hon’ble Apex Court. Further, in the appellant’s own case for the previous period, the Tribunal had set aside the demand under this category. We therefore find that the appellant has made out sufficient cause for non-payment of Service Tax and is a fit situation to invoke Section 80 of the Finance Act, 1944 to set aside the penalties”, the tribunal observed.
Case title: M/s. International Seaport Dredging Limited v/s Commissioner of GST and Central Excise
Citation: Service Tax Appeal Nos. 40452 and 40453 of 2013
