TaxTMI 
TaxTMI 
2024 (6) TMI 448
X X X X Extracts X X X X
X X X X Extracts X X X X
....e following two sources: a. Voyage Charter: Transportation of petroleum products through waterways from one port to another for freight. b. Time Charter: Renting/letting out of ships for a fixed period in lieu of rental income. Export revenue accounts for nearly 80 percent of the Appellant's total Revenue. 2.1. Transportation of goods through waterways was brought under the service tax net with effect from 01 September 2009 vide Notification No. 26/2009 - ST dated 19 August 2009. However, transportation of petroleum products has been specifically exempted vide Notification No. 30/2009 - ST dated 31 August 2009. In so far as time charter is concerned, the Appellant was of the view that the said service is covered under the taxable category "supply of goods for tangible use", obtained registration with the Service Tax Authorities in the year 2008 and had been discharging the applicable tax thereon. 2.2. In the course of its business, the Appellant had incurred various foreign currency expenses towards procurement of goods and services from vendors located outside India. Investigations were initiated against the Appellant with respect to service tax payment on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Order-in-Original dated 01.03.2017, wherein he has confirmed the demands made in the Notice along with interest and imposed equal amount of tax as penalty. Aggrieved against the said order, the appellant has filed the present appeal. 3. The appellant submits that the period involved in this case is from 2007-08 to 2011-12. Under the positive list regime, the onus was upon the Revenue to determine taxability and appropriate classification. In the Notice, if the department fails to classify the specific category under which service tax is to be paid, then the demand is not sustainable.This view has been settled by the decisions of the Hon'ble Supreme Court and the Tribunal in the following cases: (i) Commissioner of Cus (Import), Mumbai Vs. Dilip Kumar & Co. [2018 (361) ELT 577] (ii) Ms. Jetlite (India) Ltd. Vs. CCE, New Delhi [2011 (21) STR 119] (iii) Hindustan Coca Cola Beverages Private Limited Vs. Commissioner of Service Tax [2016 (42) S.T.R. 696 (Tri. - Delhi) (iv) United Telecoms Limited Vs. Commissioner of Service Tax [2011 (22) S.T.R. 571 (Tri. - Bang.) (v) Reynolds Petro Chem Limited Vs. Commissioner of Central Excise and Servi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ests 5,39,148 Non-taxable and/or exempt service 15 Rent 1,72,231 Renting of immovable property located outside India 16 Car hire 1,62,155 Not taxable as service covered under Rule 3(ii) and performed outside India 17 Ballast Water Management Summit/Conference Fee 1,33,840 Not taxable as service covered under Rule 3(ii) and performed outside India 18 Filing fee 93,949 Non-taxable and/or exempt service 19 Bunker Convention Certificate 47,724 Not taxable as service covered under Rule 3(ii) and performed outside India 20 Tender fee 4,027 Non-taxable and/or exempt service 21 Photography charges 4,801 Not taxable as service covered under Rule 3(ii) and performed outside India 22 P&I Insurance/ K & R Insurance/ Addl. Peril Insurance 18,99,74,272 Taxable Service. Tax as applicable paid by the Appellant. 23 Brokerage 11,76,14,130 Tax paid by the Appellant but subsequently refunded. 24 Data Retrieval 57,24,367 Taxable Service. Tax as applicable paid by the Appellant. 25 Annual Fee/Retainer Fee 43,02,951 Tax paid although not payable. 26 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll other specified taxable services not falling under Rule 3(i) and Rule 3(ii) above are covered by Rule 3(iii) and considered to be provided from outside India and received in India if the recipient of such services is located in India and services are used in relation to business or commerce 4.2. Therefore, to see whether a service is taxable at the hands of service receiver as import of service, the service has to be classified under the above three categories depending on the nature of such service and its classification under the provisions of the Act. 4.3. The appellant submits that most of the services where demand of service tax has been confirmed are 'performance based services' which are liable to pay service tax only if the recipient of service is located in India or wholly performed in India. In this case most of the services are performed outside India and hence they are not liable to service tax as per Rule 3(ii) of the said Rules. They have already paid service tax in respect of all those services which fall under category 3 above. However, the adjudicating authority has categorized all the services under Rule 3(iii) and confirmed service tax, which is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... foreign expenses as charges paid towards provision of taxable service and confirmed service tax aggregating to Rs. 88,75,35,408/- on a reverse charge basis. However, we find that the impugned order has not classified the specific category under which the appellant was liable to pay service tax. In the positive list regime, the onus was on the revenue to determine taxability and appropriate classification. In the present case, we observe that notice fails to classify the specific category under which the appellant is liable to pay service tax. In the absence of such specific classification, the demand is not sustainable. This view has been taken by the Tribunal in the case of Ms. Jetlite (India) Ltd. Vs. CCE, New Delhi [2011 (21) STR 119]. The relevant extracts of the judgement of the Tribunal is reproduced below: "88. The contention that the appellants have not produced any evidence to show that logo did not promote the business is totally devoid of substance in as much as that the burden to prove the classification and to bring the assessee within the net of tax primarily lies upon the department. Failure of the department to establish the basic ingredient to prove the c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndia. In this case, most of the services are performed outside India and hence they are not liable to service tax as per Rule 3(ii) of the said Rules. They have already paid service tax in respect of all those services which fall under category 3 mentioned in Para 4.1 above. However, the adjudicating authority has categorized all the services under Rule 3(iii) and confirmed service tax, which is legally not sustainable. Thus, we have to examine the service in relation to Import of service Rules, to determine the liability of service tax. 9.2. We observe that out of the total foreign currency payments, Rs.2,67,00,78,079/- pertains to expenditure incurred towards Bunker/Lubricant/Stores and Spares Supply. Bunker is the fuel which is used for running of ships and the amount paid to bunker supplier pertain to purchase of Fuel/Diesel. Such transactions which are purely in the nature of purchase of goods cannot be subjected to service tax. We observe that the Ld. Adjudicating Authority has travelled beyond the scope of the show cause notice to classify the supply of bunker as Steamer Agent Service. Since the supply of bunker has been made outside India, we hold that the same does not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncy payment amounting to Rs.1,41,39,97,195/- has been incurred under the category of 'Port Disbursement'. The Appellant submits that shipping business is globally functional, and it is not possible for the ship owner to establish an office at every port. Hence, in such a situation, agents at ports are appointed by the ship owners to run the business in other countries. Depends upon the nature of work performed by these agents, such works can be categorized either under the taxable category of "Port Service" as defined under Section 65(105)(zn) or under "Steamer Agent Service" as defined under 65(105)(i). We observe that both 'Port Service' and 'Steamer Agent Service' are performance-based services and therefore could not be taxed in India as the services were availed outside India. Accordingly, we hold that the demand of service tax confirmed on these foreign currency payments id not sustainable. 9.6. We observe that foreign currency payment amounting to Rs. 26,11,42,230/- incurred towards dry docking / special survey. The appellant submits that as per SOLAS formulated by the International Maritime Organisation (IMO), Dry-docking must be compulsorily carr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....surance Service" along with applicable interest. 9.10. We observe that foreign currency payment amounting to Rs 11,76,14,130/- has been incurred towards Brokerage. The appellant submits that the shipping companies engages third parties known as ship brokers who act as intermediaries between ship owners who wants its ship to be employed and charterer who wants a particular ship for transportation of his goods and pays brokerage to such agents. We observe that the Appellant paid the tax on the said payments under the taxable category "Business Auxiliary Service" which was subsequently refunded pursuant to the order of the CESTAT, Kolkata in Appellant's own case in Service Tax Appeal Bearing No. 76528 of 2016. 9.11. Thus, we observe that most of the services where demand of service tax has been confirmed are 'performance based services' which are liable to pay service tax only if the recipient of service is located in India or wholly performed in India. In this case, we observe that most of the services are performed outside India and hence they are not liable to service tax as per Rule 3(ii) of the said Rules. We also observe that the appellant have already paid service....