AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (4) TMI 200
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....reign exchange. Audit of the accounts of the appellants were conducted and it was noticed as follows : 2.1 During the course of audit of accounts of the assessee by the officers of Internal Audit of Service Tax Commissionerate, Chennai, it was noticed that the assessee incurred expenditure in convertible foreign currency towards hiring of Dredgers, Tug Boats, Survey Boats and Barges from their overseas group companies, viz, JDN, Luxemburg and JDN, Belgium. The said goods were hired by the assesse in connection with execution of dredging contract for Rs. 465 Crores awarded by Tuticorin Port Trust for deepening of channel and basin to cater to 12.80M draught vessels at the Port. It appeared that the assesse are liable to pay service tax under "Supply of Tangible Goods Service" as recipient of service from foreign companies, in terms of Section 66A of the Finance Act, 1994 read with Rule 2(1)(d)(iv) of Service Tax Rules, 1994. During the period from November 2010 to October-2011, the assessee have paid a sum of Rs. 203,30,87,235/- to overseas companies and the service tax payable on the said amount works out to Rs. 20,94,07,985/-. 2.2 Further, it was noticed that the assessee having....
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....the assesse had availed cenvat credit on goods such as discharge box upper body, platform for discharge box, diffuser, container with fuel tank, ball joint, airflex element, old and used self propelled special service work boat/fuel tank ship, used cutter suction dredger, used split hopper dredger, assorted ship spare parts, etc but reversed such credit taken when the goods were re-exported by them on various dates. As it appeared that the assessee is not entitled to take credit as these are not covered under the definition of capital goods, the assesse is liable to pay interest of Rs. 10,42,911/-. 3. In view of the above, a show cause notice was issued to the appellant on 10.04.2012 demanding the service tax involved stated herein above. The submissions dated on 11.5.2012 by the appellant before the original authority indicated that they were paying hire charges in convertible foreign exchange and they had the effective control and possession over the vessels and right to use of the said goods was transferred to them and they required professional man power and the same was received by them and they obtained specific period licence from the Ministry of Shipping for the usage of v....
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.... therefore he has confirmed the demand. The Ld. Counsel submitted that the issue is no more res integra and is settled by the decision of this Tribunal in the case of International Seaport Dredging Ltd. Vs CST Chennai - 2018 (12) G.S.T.L. 185 (Tri.-Chennai). He further submitted that there was similarity in the clauses of agreement in the case of International Seaport Dredging Ltd. (supra) and in the present case. He further extracted the relevant clauses of both the cases as follows : Clauses of the ISDL Agreement Clauses in the present case Charter for Vessel Charter for Equipment Clause 9 of the Charter states that the vessel shall during the charter period be in full possession and at the absolute control for all purposes of the charterers and under their complete control in every respect. The charterers shall maintain the vessel, her machinery, boilers, appurtenances and spare parts in a good state of repair in efficient operating conditions and in accordance with good commercial maintenance practice. Clause 9 (b) states that the dredgers shall at their own expenses and by their programme man, virtual, navigate, operate, supply fuel and repair the vessels whenever require....
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.... aspect save as otherwise provided herein. The Charterer will make no structural changes to the equipment without first having its Owner‟s approval thereof. Section 6 states that the Owner is obliged to insure the equipment for an adequate amount and the policy taken out should at least cover the risk of damage to the equipment. The policy should also cove damage resulting from a defect of the equipment, damage cause by the equipment to a third party, personal as well as material damage and environmental damage caused by the equipment. Also, the Charter and the Charter‟s Employer and Engineer should be co-insured in the policy taken out by Charter. The insurance premium and the own risk per case of damage shall be entirely for owner‟s account. Section 7 states that Owner shall indemnify Charterer against all damage, costs and possible fines on behalf of the equipment. Clause 9 (b) states that the dredgers shall at their own expenses and by their programme man, virtual, navigate, operate, supply fuel and repair the vessels whenever required during the Charter Period and they shall pay all charges and expenses of every account and nature whatsoever incidental to th....
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....ellant. We set aside the impugned order to this extent and allow the appeal on this issue with consequential relief, if any, to the appellant. 8. The other issue involved is whether the appellant was required to pay under reverse charge mechanism service tax of around Rs. 1.65 crores towards Man Power Recruitment and Supply Agency Service. Appellant has submitted that the man power was supplied by JDN-Pacific whose employees were paid salary by the appellant and Form-16 in the income tax series was issued to each employee in the capacity of employer. Further, the TDS for income tax was also deducted and credited to income tax account of the exchequer. He has submitted that only for the reason that the disbursement was routed through JDN Pacific Ltd., it cannot be said that the appellant was receiving man power recruitment and supply agency service and was required to pay service tax under reverse charge mechanism. He has further submitted that the said issue is no more res integra and decided by this Tribunal in the case of TPSC India Pvt. Ltd. Vs CST Hyderabad 2016-TIOL-1746-CESTAT Hyderabad. 9. We have heard Ld. A.R who has supported the findings of the original authority. 10.....