TaxTMI 
TaxTMI 
2023 (10) TMI 318
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....am 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. Aggrieved by the confirmation of demand of Service Tax, interest and penalties imposed the appellants are now before the Tribunal. 3.1 The Ld. counsel Shri Raghavan Ramabadran appeared and argued for the appellant. The details of the Show Cause Notice period involved and the issues are furnished below:- Appeal No. O-in-O Period Nature of services for which demand confirmed/dropped 1.ST/40452/2013 40&41/2012 dt. 30.11.2012 01.01.2009 to 31.03.2009 a) Soil stabilisation and land reclamation services alleged to be dredging services provided to Dhamra Port confirmed. b) Supply of Dredgers as Dredging Services confirmed c) Maintenance and Re....
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....vides dredging services by removing material including silt, sediments, rocks, sands, debris, etc., form the port / navigational route, so that the vessel can approach and berth at the port. * The appellant has remitted applicable service tax on dredging services. This is an undisputed fact as is reflected in paragraph 4 of the Show Cause Notice No. 240/2010 dated 19.04.2010 and paragraph 4 of the Show Cause Notice No. 608/2010 dated 11.10.2010. ii. Land Reclamation: * The land reclamation process involved reclamation of land from the sea. The appellant was required to undertake activities such as construction of containment of dikes, extraction of filling material from the respective locations, filling up of the proposed reclamation site with the fill material as specified by the customer for finally reclaiming the land. * The appellant did not remit service tax on the land reclamation activities since the activity is classifiable as 'site formation services' under Section 65(105)(zzza) of the Act, and site formation services provided in the course of construction of ports were exempted from the levy Service Tax under Notification No. 17/2005 dated 07.06.2005. iii. Soil ....
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....erformed outside India. 5.1 The Ld. counsel submitted that the Tribunal in the appellants own case had occasion to consider all these three issues as reported in [2018 (6) TMI 933] and adverted to the same. 5.2 In regard to the demand of Service Tax as dredging services at Dhamra Port, for soil stabilisation and reclamation services, the Ld. counsel explained that appellant had entered into three separate contracts for dredging, soil stabilisation and land reclamation. The appellant had discharged the service tax for dredging services provided by them. They are not liable to pay service tax for amounts received for land reclamation and soil stabilisation for the reason that these services in the nature of site formation services are exempted from payment of service tax when provided at port as per Notification No. 17/2005-ST. 5.3 In the earlier appeal, the Tribunal had remanded this issue to the adjudicating authority to verify whether the contracts are separate for the three activities and to consider the issue afresh. In such remand proceedings, the adjudicating authority vide Order-in-Original No. 15/2020 dated 31.10.2020 dropped the demand on amount received for Soil Stabili....
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....ith a complement of officers and crew, the decision where to do the dredging work, the hours of operation etc. are totally those of the Dredging Corporation of India and appellants have no role or say in that whatsoever. The positioning of one Appeal Nos.ST/502504/2010 representative of the appellant on board the vessel may well be for co- ordination purpose, but it is nobody's case that the said representative calls the shots in respect of dredging operations. From the sample of the invoice produced by the Ld. Advocate (page 351 of compilation), it is in fact seen that the billing has been done based on operational hours at 100% and at 85% and even at 0%. The DCI has also been billed towards wear and tear of the dredging equipment at Rs. 3.60 per cubic metre. If the services provided by the appellant indeed was only "dredging service", the appellant would not have been able to bill DCI for such wear and tear charges. In our considered opinion, the activity of the appellants may possibly fall under supply of 'Tangible Goods Service', but surely not under 'Dredging Service'. It is interesting to note that appellants have paid service tax amount of Rs. 57,03,661/- towards the service....
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....ovided that such services are partly or fully performed in India. The services having been provided outside India, the demand is prayed to be set aside. 5.9 The fourth issue is with regard to the Manpower Recruitment and Supply Agency (MRSA) Services. This issue was also considered by the Tribunal for the earlier period (appeal). The demand was then set aside. The relevant discussion of the Tribunal reads as under:- "(b) Manpower Supply Services: (i) The dispute relates to salary payments paid to the "expatriate" employees employed under them. According to appellant, the salary payments had been routed through foreign companies who made Appeal Nos.ST/502-504/2010 payment to the said employees on behalf of the appellant in foreign currency and on reimbursement basis without any mark up. (ii) The appellants have contended that with each of the expatriates, drafts for employment had been drawn up, which, inter alia, indicated the monthly salary payable. The appellant, therefore, contends that liability to pay salaries rested with the appellants and not with the foreign companies. They also pointed out that income tax had been deducted and TDS certificates issued to these employ....
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....esident 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 dated 01.11.2004 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. The salient features of this agreement are as below: Clause B: Bellsea to depute 'Secondees' to the assessee initially for a period of 3 years and renewable further as per agreed terms Clause ID: Bellsea agreed upon the terms and conditions relating to the secondment of the Secondees Clause_1.1.b)- Definition of 'Secondees': Secondees means the employees of Bellsea to be deputed to the assessee Clause 2.2.2:: During the period of secondment, Bellsea shall pay salaries net of income tax outside India and the assessee shall provide perquisites and other benefits to the secondees 6.2 The appellant has also furnished copy of ....
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.... documentary evidence with regard to deputation of personnel to the appellant and extension of deputation to responsibility for payment of salaries is remains within the control of Bellsea itself. The above facts establish that the personnel deputed to the appellant continued to be employees of Bellsee. Under the facts and circumstance, personnel claimed to be the employees of the appellant are actually employees of the Foreign Service provider and the amount paid by the appellant to them as salary is nothing but a consideration for providing manpower services. 6.5 The argument of the Ld. counsel for the appellant that the amounts are nothing but reimbursements and therefore not subject to levy of Service Tax prior to 2015 was countered by the Ld. AR by stating that the said issue was brought to the notice of the Hon'ble Apex Court in the case of Northern Operating Systems P Ltd. [2022-TIOL-48SC-ST-LB]. However, the Apex Court held that secondment agreement comes under the category of Manpower Supply Service and is subject to levy of Service Tax. The said decision of the Hon'ble Apex Court was followed by the Tribunal in the case of M/s. Renault Nissan Automotive India Pvt. Ltd. [....
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....eclamation activities is as under:- "7. Dredging service 7.2 This taxable service covers dredging which is generally undertaken for removal of material such as silt, sediments, rocks etc. of rivers, ports, harbour, backwater or estuary for providing adequate draught for ships and other vessels and to maintain shipping channels. Service tax is leviable only on dredging of river, port, harbour, backwater or estuary and dredging in any other cases does not attract service tax. The definition of dredging is an inclusive definition and the activities specified are only indicative and not exhaustive. As clarified by the Ministry, the dredging service is generally undertaken for removal of material such as silt, sediments, rocks, etc for providing adequate draught for ships and other vessels and to maintain shipping channels. It is therefore seen from the definitions and the clarifications reproduced above that soil stabilisation and land reclamation work are specifically included under site formation service [Section 65(97a)] whereas Dredging service is separately notified under Section 65(36a), even though both the services were brought under tax net on the same day ie, 16.06.2005....
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.... service offered by the appellant to Dredging Corporation of India by way of charter-hire of vessel for dredging work of the Sethu Samudram Canal Project. The demand of Service Tax is under Dredging services. In paragraph 13.1.1, the facts have been discussed by the adjudicating authority as under:- "13.1.1 A perusal of the Agreement dated 10.01.2008 between ISDL (Owner) and DCI (Charterer) at plain sight appears to be an agreement for charter-hire of vessel for dredging work of the Sethu Samudram Canal Project. However, on detailed scrutiny of the same, it is observed that not only has the vessel been leased out but also, the manpower. DCI have deputed only 3 persons for the said project. Hence, the contention that dredging was carried out by DCI appears far-fetched. Also, if the dredging activity was indeed carried out by DCI, there was no reason for ISDL, as the owner of the vessel to maintain the record of daily/weekly and monthly production and log sheets. That ISDL have rendered dredging services is further reinforced by the fact that at Sl. No. 8B of the General conditions of the Contract, it has been mentioned as follows: "The Vessel should be dredging for a minimum per....
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....licability of service tax under import of services, the location of service' is to be determined and as all their services were carried out outside India, service tax will not be applicable on the same. Based on the above reply given by the assessee, I have examined the documents submitted by them to confirm their averments on the place of provision of service. I find that for the work carried out at Colombo Dockyard, they have submitted various documents such as work-done certificate/Invoice wherein date-wise details of work done vis-à-vis the charges for the same has been given. In the said Invoice, charges for occupation of dock, wharfage, etc., were given, which indicate that the repair work have really been carried out at Colombo Dry Dock, Sri Lanka, only. Similarly, invoices issued by the ST Marine dry-docking yard for repair work carried out for the vessel 'Pacifique' at Singapore were also found available in the reply given by the assessee earlier and hence all the above confirm that the repair and maintenance work have been carried out outside India. As per Taxation of Service (Provided from outside India and Received in India) Rules, 2006, maintenance....
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....d to by the Hon'ble Apex Court, the Hon'ble Apex Court has only considered taxability under the category of manpower requirement and supply agency services and has not considered the valuation aspect. The discussion in paragraph 34 of the said judgment is as under:- "34. The contemporary global economy has witnessed rapid cross-border arrangements for which dynamic mobile workforces are optimal. To leverage talent within a transnational group, employees are frequently seconded to affiliated or group companies based on business considerations. In a typical secondment arrangement, employees of overseas entities are deputed to the host entity (Indian associate) on the latter's request to meet its specific needs and requirements of the Indian associate. During the arrangement, the secondees work under the control and supervision of the Indian company and in relation to the work responsibilities of the Indian affiliate. Social security laws of the home country (of the secondees) and business considerations result in payroll retention and salary payment by the foreign entity, which is claimed as reimbursement from the host entity. The crux of the issue is the taxability of the ....