2013 (8) TMI 711 - AT - Service Tax

Classification of service The service provided by the assesse would fall under which of the category - Ship Management Services u/s 65(96), Maintenance and Repair Service u/s 65 (105) (zzg), Technical and Analysis Service u/s 65 (105) (zzh) , Business Auxiliary Service u/ s 65 (105) (zzb) and Business Support Service u/s 65 (105) (zzzq) - Assesses were engaged in transport of cargo throughout the world using ships owned/charted by them Revenue was of the view that these remittances were made taxable - Held that - Service provided was classifiable as Business Auxiliary Service and service tax liability would arise because this service also was specified in clause (iii) of Taxation of service (provided from India and Received in India) Rules, 2006 where liability was based on the place of residence of the recipient of service and not based on the place of performance of service 1.3crores were ordered to be submitted as pre-deposit on such submission rest of the duty to be waived Decided against assesse.

Summary

Issues:
Stay applications for waiver of pre-deposit of dues, classification of services for service tax, financial hardship plea, time-bar contention.

Analysis:
The judgment by the Appellate Tribunal CESTAT CHENNAI involved four stay applications by the appellant concerning identical issues related to service tax demands for different periods. The Revenue alleged non-payment of service tax on remittances made to agents abroad for various services. The demands were based on the Finance Act, 1994, specifically section 66A. The appellant contested the classification of services, particularly Ship Management Service and Business Auxiliary Service, arguing that the remittances were for salaries and crew expenses, not services received from agents abroad. The appellant also raised financial hardship concerns and questioned the time-bar for the demands.

Regarding Ship Management Service, the appellant argued that the remittances were for crew salaries and expenses, not services received from agents abroad. The Revenue cited the definition of Ship Management Service under section 65(96a) of the Finance Act, emphasizing the coverage of crew engagement and victualing by persons abroad. The Tribunal noted the lack of evidence supporting the appellant's claim and found the service taxable under Rule 3 of Taxation of Services Rules.

Concerning Business Auxiliary Service, the appellant contended that the service provided by foreign agents for cargo canvassing was outside India and not taxable under the Finance Act, 1994. However, the Revenue argued that the activity fell under Business Auxiliary Service as per the Act. The Tribunal agreed with the Revenue's interpretation, stating that the service's tax liability depended on the recipient's residence, not the service location.

Addressing the financial hardship plea, the Tribunal examined the appellant's cash flow statement, noting substantial liquid assets. Emphasizing the government's priority for tax payments, the Tribunal ordered a pre-deposit of Rs.1,30,00,000 within 8 weeks, with a stay on the balance dues pending compliance by a specified date.

Regarding the time-bar contention, the Tribunal dismissed the appellant's argument, stating that the issue was uncovered through departmental investigations, and the appellant had not sought clarification earlier. The Tribunal's decision balanced the arguments presented by both sides, emphasizing the need for tax payment priority and financial assessment based on overall assets.

In conclusion, the Tribunal upheld the demands for Ship Management Service and Business Auxiliary Service, ordered a pre-deposit for financial compliance, and granted a stay on the balance dues during the appeal's pendency.