2013 (1) TMI 349 - HC - Service Tax

Ship Management Services - Management Consultancy Services - Whether the CESTAT was justified in directing the appellant to deposit for entertaining the appeal against the order - Assessee is engaged in providing ship management services to shipping companies - Show-cause notice was issued on 12th February 2009 - Demand of tax by an order-in-original dated 10th December 2009 Against order assessee file an appeal before CESTAT for waiver of pre-deposit - In the year 2007 assessee has collected and paid tax from ABG Shipping under the heading Manpower Recruitment and Supply Agency Services Held that - From the judgment of the Tribunal in the case of Creative Marine Services (2011 (8) TMI 610 - CESTAT, MUMBAI), it appears that the Revenue was seeking to tax such services under the head Management Consultancy Services . Thus, it is seen that prior to 1st May 2006, there is inconsistency in the stand of the Revenue. Therefore, it would be just and proper in the facts of the present case to hear the appeal on merits without insisting on any pre-deposit. In favour of assessee

Summary

Issues:
1. Justification of directing appellant to deposit Rs.85,00,000 for appeal.
2. Classification of services rendered by the appellant.
3. Consistency in Revenue's stand on tax leviability.
4. Validity of CESTAT's order for pre-deposit.

Analysis:
1. The primary issue in this case pertains to the justification behind the Central Excise and Service Tax Appellate Tribunal (CESTAT) directing the appellant to deposit Rs.85,00,000 for entertaining the appeal against the order-in-original dated 10th December 2009. The High Court admitted the appeal on the substantial question of law and proceeded to hear the matter based on the consent of both parties.

2. The appellant, engaged in providing ship management services, contested the classification of services rendered. The appellant argued that services provided from 1st May 2006 fell under "Ship Management Services" and not under "Manpower Recruitment and Supply Agency's Services" before this date. The High Court referred to a previous judgment involving Creative Marine Services, highlighting the inconsistency in the Revenue's stance, which sought to tax the services under 'Management Consultancy Services'. The court concluded that due to the Revenue's inconsistent stand, it was just to hear the appeal on merits without insisting on any pre-deposit.

3. The court emphasized the inconsistency in the Revenue's position regarding the tax leviability of services provided by the appellant before 1st May 2006. Despite the appellant collecting and paying tax under 'Manpower Recruitment and Supply Agency Services' for a specific period, it did not imply acceptance of tax liability under the same heading. Given the Revenue's varying positions, the court found it appropriate to allow the appeal to proceed without a pre-deposit requirement.

4. Consequently, the High Court quashed and set aside the CESTAT's order dated 23rd February 2012, directing the tribunal to hear the appeal on merits in accordance with the law without insisting on any pre-deposit. The appeal was disposed of with no order as to costs, providing relief to the appellant and clarifying the tax liability classification issue based on the facts and circumstances presented in the case.