2011 (8) TMI 610 - AT - Service Tax

Ship Management Service versus Manpower Recruitment Agency- Revenue Service of recruitment and supply of officers and crew etc. on board ship classifiable under Management Consultancy Service - Held That - Appellant specifically provided - Short listing and selection of officer and crew Issuing engagement/employment contract to officer and crew Prepare and affect crew change s rule Providing shore supervisor. These services specifically fall under Ship Management Services which came into force on 01.05.06.Thus during the impugned order appellant not covered under Management Consultant s Service hence demand of service tax is not sustainable.

Summary

Issues:
Appeal against demand of service tax under 'Management Consultant's Services' category, denial of cancellation of registration, show-cause notice for service tax, classification of services under Management Consultants Services, applicability of service tax on gross value of services, inclusion of reimbursable expenses, registration under Manpower Recruitment Services, liability to pay service tax twice, coverage under Ship Management Services, period of dispute not covered under normal limitation, previous show-cause notice dropped, relevant case laws.

Analysis:
The appellant appealed against the demand of service tax under the category of 'Management Consultant's Services' along with interest and penalties. The appellant, registered as a 'Manpower Recruitment Agency,' had filed a request for cancellation of registration which was denied. A show-cause notice was issued in 2004 alleging that the appellant was rendering Management Consultant's Service. The appellant contended that they were providing Manpower Recruitment Services and not Management Consultants Services, registered under the former since 1997. The appellant argued that they should not pay service tax twice on the same activity and that their services were more appropriately covered under Ship Management Services introduced in 2006. The appellant cited circulars and trade notices to support their position and referenced previous cases where similar activities were not classified as Management Consultant Services.

The department argued that the services provided by the appellant fell under Management Consultants Services based on the agreement, and thus, service tax was applicable on the gross value of the services. After considering both sides and reviewing the agreement, the Tribunal found that the services provided by the appellant were more aligned with Ship Management Services, which came into force in 2006. The Tribunal noted that the appellant's activities were not covered under Management Consultant's Service during the disputed period. Referring to a previous case and relevant case law, the Tribunal concluded that the demand of service tax was not sustainable for the appellant during the period in question. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief, if any.

This judgment addressed the issue of classification of services and the applicability of service tax under specific categories. It highlighted the importance of accurately determining the nature of services provided to ascertain the correct tax liability. The Tribunal's decision was based on a thorough analysis of the activities undertaken by the appellant and their alignment with the relevant service categories introduced by law. The judgment also emphasized the significance of legal precedents and circulars in interpreting tax laws and determining tax liabilities for service providers.