2015 (12) TMI 1218 - AT - Service Tax

Tribunal Waives Pre-Deposit in Tax Appeal Case

M/s International Seaport Dredging Ltd. Versus Commissioner of Service Tax, Chennai

The Tribunal granted a waiver of pre-deposit during the appeal's pendency in a case concerning taxability under section 65(105)(zzzz) of the Finance Act, ... Supply of tangible goods service - whether without any effective control and transfer of ownership which are essential ingredient of section 65 (105)(zzzz) of Finance Act, 1994, there shall be taxability under the shelter of provision of services in relation to supply of tangible goods - Held that:- Prima facie, interpretation of law is involved in this case with the bundle of facts including contract documents touching the same. In respect of similar nature of transactions Tribunal in the case of Petronet LNG Ltd. Vs Commissioner of Service Tax, New Delhi [2013 (11) TMI 1011 - CESTAT NEW DELHI], has held no taxability. However, without prejudice to the contentions of both sides at this stage there shall be waiver of pre-deposit during pendency of the appeal. - stay granted. Issues:1. Taxability under section 65(105)(zzzz) of Finance Act, 1994 without effective control and transfer of ownership in relation to supply of tangible goods.2. Reimbursement of Customs duty and entry tax for export of the boat under the purview of the Finance Act, 1994.3. Service provided in relation to supply of tangible goods, effective control, and ownership leading to tax liability.Analysis:1. The primary issue in this case revolves around the taxability under section 65(105)(zzzz) of the Finance Act, 1994, concerning the supply of tangible goods without the essential elements of effective control and transfer of ownership. The appellant argues that despite having effective control over a boat brought into India for operation, without the transfer of ownership, there should be no tax liability. Reference is made to the absence of any service element related to the supply of tangible goods in the Adjudication order, citing a precedent from the Tribunal in the case of Petronet LNG Ltd. vs Commissioner of Service Tax, Delhi. The lack of such a finding would negate the taxability in this scenario.2. The second issue pertains to the reimbursement of Customs duty and entry tax incurred during the export of the boat, with the appellant contending that the discharge of duty liability and subsequent reimbursement fall outside the scope of the Finance Act, 1994 for taxation purposes. It is highlighted that the Adjudicating authority overlooked the declaration of Rule 5 of the Service Tax (Valuation) Rules as ultra vires by the Hon'ble High Court of Delhi in a specific case, emphasizing the legal intricacies involved in the matter.3. On the contrary, the Revenue argues that services were indeed provided in connection with the supply of tangible goods to the appellant, who exercised effective control and had ownership over the boat. This perspective asserts the liability to tax based on the premise that the payment of Customs duty and entry tax upon the boat's arrival in India contributed to the value of the tangible goods supplied. The contention is supported by the interpretation of the law and factual evidence presented, emphasizing the relationship between service provision, control, ownership, and tax liability.In conclusion, the Tribunal acknowledges the complexity of the legal interpretation in this case, considering the factual nuances and contractual documents involved. While citing a previous ruling in a similar transactional context, the Tribunal opts to grant a waiver of pre-deposit during the appeal's pendency, ensuring fairness to both parties. This decision signifies a balanced approach to addressing the issues raised by the appellant and the Revenue, maintaining procedural integrity and legal considerations throughout the judgment.