2024 (6) TMI 448
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....: 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 these foreign currency expenses. The appellant sought advice f....
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....e 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 Service Tax - 2023 (68) G.S.T.L. 292 (Tri. - Ahmd) (vi) Balaji Enterprises Vs. Commissioner of Central Excise and Service Tax - 2020 (33) G.S.T.L. 97 (Tri. - Del.) 3.1. in the instant case, leave alone classificatio....
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....le 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 Professional charges 31,98,973 Taxable Service. Tax as applicable paid by the Appellant. 27 Audio Visual Training software 18,50,821 Taxable Service. Tax as applicable paid by the Appellant. 28 Ship Valuation 8,43,549 Taxable Service. Tax as applicable paid by the Appellant. 29 Fuel and KIT Testing 5,85,340 Taxable Service. Tax as applicable paid by the Appellant. 30 Navigation dues 3,92,0....
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.... 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 legally not sustainable. 4.4. In view of the above explanations, the appellant submits that the demand of service tax confirmed in the impugned order is not sustainable. Accordingly, they prayed for setting aside the same. 5. Regarding the penalty imposed on regarding the penalty imposed on Shri K. Satishchandra, the Appellant stated that the Impugned Order has imposed Penalty under Section 9AA of the Central Excise Act, read with Section 83 of the Finance Act. It is submitted that Section 9AA deals with Offences by Companies a....
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....x. 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 charge against the assessee can neither shift the burden, nor can give any advantage to the department." (emphasis supplied) 8.1. In the case of United Telecoms Limited Vs. Commissioner of Service Tax [2011 (22) S.T.R. 571 (Tri. - Bang.)], it has been observed as under: "6. We find that no demand can be confirmed against any person towards service tax liability unless he/it is put on notice as to its exact liability under the statute. In the show-cause notice basic to the proceedings, the impugned activities were proposed to be classified under....
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.... 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 qualify as import of service. Further, it is a settled principle in law that Adjudicating Authority cannot travel beyond Show Cause Notice as held by this Tribunal in the case of Ganpati India International Private Limited Vs. CCE, Bolpur [2014 (35) S.T.R. 709 (Cal.)]. Accordingly, we hold that the demand of service tax confirmed in the impugned order on this count is not sustainable. 9.3. We observe that foreign currency payment amounting to 1,63,93,96,861/- has been incurred towards Freight and demurrage charges. The freight is paid for transportation of Oil by ship fr....
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....rvice" 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 carried out twice in every five years Dry Docking is a technique used to remove a ship from the water so that the underwater portion of it may be inspected, repaired, maintained and/or altered. Such payments could only be tested against the taxable category "Maintenance or Repair Service" - Section 65(105)(zzg) which is a performance-based service and therefore could not be taxed in India as the services were availed outside India. We observe that the ld. adjudicating authority has not categorized this under any specific category of service. We agree with the submission of the appell....
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....efunded 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 tax in respect of all those services which fall under category 3 (as listed in Sl. Nos. 22 to 32 of the Table mentioned in paragraph 4 above). However, the ld. adjudicating authority has categorized all the services under Rule 3(iii) and confirmed service tax, which is legally not sustainable. In view of the above discussions, we hold that the demands confirmed in the impugned order are not sustainable on merits also. 10. As regarding the penalties imposed of Shri K. Satishchandra, we observe that the Impugned Order has imposed Penalty under Section 9AA of the Central Excise Act read wit....