TaxTMI 
TaxTMI 
2013 (12) TMI 208
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....wages/salaries of the officers and crew members so supplied in addition to service charges for the service rendered. The department was of the view that the services undertaken by the appellant were liable to be taxed under the category of "Manpower recruitment or supply Agency Services" for the period prior to 1.5.2006 and under the category of "Ship Management Services" w.e.f. 1.5.2006. The agreement entered into by the applicant indicated the following namely:- (a) The appellant is appointed as the Manning Contractor. (b) The appellant has to arrange for Master, Officers and Crew on-board the vessel as required under Merchant Shipping Act, 1958 and any other International Maritime Act and as per manning standards. (c) The officers and Crew so supplied remain as employees of the appellant. (d) The appellant would provide victualling and housekeeping services and, (e) The appellant would be paid consolidated charges per calendar month. (ii) The statements of Managing D....
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.... Service' and the services rendered by them are correctly classifiable under "Ship Management Services" w.e.f. 1.5.2006. (ii) For the period sub sequent to 1.5.2007, M/s SICAL, the main contractor has paid Service Tax on the entire amount and they were only sub-contractors and, therefore, they are not required to pay any Service Tax as the main contractor has discharged the Service Tax liability. (iii) With regard to services rendered to M/s ABG Shipping Co., though they have recovered Service Tax from the customers, they are not required to discharge the Service Tax from the customers, they are not required to discharge the Service tax liability to the exchequer, as Section 73A which mandates deposit of Service Tax with exchequer in respect of Service Tax collected from the customers came into force only from 18.4.2006 and, therefore, they are not liable to discharge any Service Tax liability even though they have recovered the Service Tax from their customers. (iv) It is also their contention that they are not required to discharge Service Tax liability on the emoluments recovered from the customers towards supply of manpower and if....
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....nt to the shipping companies are squarely covered under "Manpower Recruitment or Supply Agency Service" and, therefore, for the period from 16.6.2005 to 30.4.2006, Service Tax is liable to be paid by the appellant under the said category and for the period w.e.f.1-5-2006, service tax is liable to be paid under "ship management services". He relies on the Board's Circular No. 334/1/2008-TRU dated 29.2.2008, wherein it has been clarified that "specifying a service separately as a taxable service does not necessarily mean or suggest that services falling within the scope of newly specified service were not earlier classifiable under any one of the existing taxable services." He also relies on the judgment of the Tribunal in the case of Jetlite (India) Ltd. Vs. Commissioner of Central Excise, New Delhi reported in 2011 (21) STR 119 (Tri-Del) in support of the above contention. He also points out that the appellant had collected Service Tax from M/s ABG Shipping Co. but had not deposited the same to the exchequer and in respect of M/s SICAL, the appellant at the first instance issued invoices charging Service Tax but later on issued another set of invoices without Service Tax bearing th....
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....L, the appellant at the first instance issued invoices charging Service Tax but later on issued another set of invoices without Service Tax and both the invoices bore the same number. Similarly, in the case of M/s Pranik Shipping, the appellant charged and recovered Service Tax but did not deposit the same with the department and the non-payment was done on the instructions of their client. For the period prior to1.5.2006, there is no dispute about the taxability of the appellant's activity. Service Tax of Rs. 66,97,365/- has not been paid by the appellant in respect of the services provided to M/s SICAL on the plea that they are only a sub-contractor and Service Tax has been paid by M/s SICAL. Since the appellant is a service provider and M/s SICAL is a service receiver and it is the appellant's responsibility to discharge Service Tax liability to the Govt. This issue has also been settled by the CBE&C vide Circular No. 96/7/2007-ST dated 23.8.2007, wherein it has been clarified that Service Tax is leviable on any service provider, whether in the capacity of a sub-contractor or a contractor and it is the service provider who has to discharge Service tax liability. Reliance is plac....
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....tractor, agreed to provide to the owner of the such vessel such personnel for the said purpose on the terms and conditions mutually agreed upon. Clause 3.1 of the said agreement makes it absolutely clear that the appellant was required to provide certified and experienced officers/crew to the owner of the vessel and the charges were collected for the various categories of crew deployed on per man per day basis as provided in clause 3.12 of the agreement in addition to a consolidated sum of Rs.4.64 lakhs per calendar month towards supply of 8 officers and 8 crews in terms of clause 5.1 of the agreement. Clause 6.1 also makes it clear that the crews engaged in the ship are the employees of the appellant, who has to ensure payment of wages and other statutory dues, to the employees. Similarly, in the agreement entered into with M/s Pranik Shipping services ltd., the appellant was engaged as a Manning Manager for providing competent, certified and experienced personnel on the vessel as required for running and maintenances of the vessel and the agreement was valid for a period of 12 months. The responsibilities included engagement and providing the required personnel including Master, ....
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.... that for the period prior to 1.5.2006, the service was not taxable at all. 5.5 It is also on record that the appellant has collected Service Tax from some of his customers such as M/S ABG Shippinig Co. and M/s Pranik Shipping without remitting the same to the exchequer. This shows that he was fully aware of his Service Tax liability. In respect of M/s SICAL, invoices were issued initially indicating Service Tax liability but on the advice of M/s SICAL, invoice bearing the same numbers and other particulars were re-issued without indicating Service Tax. Thus, the very conduct of the appellant clearly reveals that the appellant fully well knew that the activity undertaken by him was liable to Service Tax and had also taken precaution by collecting Service Tax from customers wherever they did not object. 5.6 The argument that after 1.5.2006, there is a specific service namely "Ship Management Service" which covers supply of crew for the ships and, therefore, the activity is liable to be taxed only on or after 1.5.2006 does not stand to any logic or reason. The definition of 'Ship Management Service' includes 10 categories of activity. Supply of manpower was only one of the acti....
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....a vessel for off-shore oil exploration purposes would be classifiable under "Mining Services" or "Supply of Tangible Goods for Use Service". The Hon'ble High Court, after going through the contracts/agreements entered into between the parties, held that the activity is more appropriately covered under "Supply of Tangible Goods for Use Service' and not under 'Mining Service'. The Hon'ble High Court observed that the activity of charter hiring of vessel was neither explicitly nor impliedly covered under Mining Service and, therefore, it could not be included within the scope of Mining Service. It was in that context, the Hon'ble High Court observed that in case a specific entry covering a service has been added at the later point of time, it would imply that the service is taxable only after the specific entry has been introduced and not before. That is not the issue before us. In the present case, prior to 1.5.2006, there were specific entry covering 'Manpower Recruitment or Supply Agency Service' under Section 65(68) read with Section 65 (105)(k) which covered all types of recruitment or supply of manpower, in any manner, whether temporarily or otherwise for all purposes. Thus it i....
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....n ineffective or odious." 5.10 In Doypack Systems Pvt. Ltd. [1988 (36) ELT 201 (SC)], the hon'ble Apex Court explained the object of statutory interpretation as follows:- "57 . It has to be reiterated that the object of interpretation of a statute is to discover the intention of the Parliament as expressed in the Act. The dominant purpose in construing a statute is to ascertain the intention of the legislature as expressed in the statute, considering it as a whole and in its context. That intention, and therefore the meaning of the statute, is primarily to be sought in the words used-in the statute itself, which must, if they are plain and unambiguous, be applied as they stand..........." 5.11 If we follow these principles laid down by the Hon'ble Apex Court with regard to interpretation of statutes and apply the same to the facts of the present case, it is obvious that the activity undertaken by the appellant, for the period prior to 1.5.2006, has to be held as classifiable under "Manpower recruitment or supply Agency Services". If that is not done, we would be making the provisions of Section 65 (68) read with Section 65 (105)(k) relating to "man power recru....
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....est that it is a single point tax law without being a multiple taxation legislation. In absence of any statutory provision to the contrary, providing of service being event of levy, self same service provided shall not be doubly taxable. If service tax is paid by a sub-broker in respect of same taxable service provided by the stock-broker, the stock broker is entitled to the credit of the tax so paid on such service if entire chain of identity of sub-broker and stock broker is established and transactions are provided to be one and the same. ......" This decision was followed by another co-ordinate bench of this Tribunal in Sew Construction Ltd. case (supra) wherein it was held that - "we do not find any provision in the Finance Act, 1994 to grant immunity to the sub-contractor from levy of service tax when undisputedly taxable services were provided by them. ......" Therefore, the argument that since the main contractor is discharging service tax and therefore, the sub-contractor need not pay service tax is without any legal basis and is quite contrary to the concept and practice of Cenvat Credit Scheme and accordingly, we reject this contention totally. 5.15 Another issue rais....
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....oked in the present case and accordingly, the Service Tax demand is liable to be upheld. 5.17 The last issue for consideration is regarding the penalties imposed on the appellant. Penalties have been imposed under Sections 76, 77 and 78 of the Finance Act, 1994. Penalty under Section 76 has been imposed for the default in payment of Service Tax and under Section 77 for delay in submission/non-submission of ST-3 returns. Whenever there is default in payment of Service Tax or delay in payment of Service Tax, the provisions of Section 76 are automatically attracted. There is no mens rea is required to be proved for imposition of penalty under the said section as the language of the said section does not prescribe or stipulate any such requirement. Therefore, imposition of penalty under the said Section is sustainable in law. As regards the penalty under Section 77, same is for non-filing of returns and non-compliance to other statutory provisions. In this case also, mens rea is required to be established and mere violation of the statutory provisions would suffice. Therefore, as held by the hon'ble Apex Court in the Gujarat Travancore Agency case [1989 (3) SCC 52] and Chairman, SEB....