2014 (7) TMI 365 - AT - Service Tax

CENVAT Credit - manpower supply service - payment of salary through another company - Penalties under Section 76 and Rule 15 - Held that - appellant handed over the entire container terminal to M/s. India Gateway Terminal Pvt. Ltd. (IGTPL). While doing so, the employees who were already working in the terminal were also required to be employed by IGTPL as per the agreement between the appellant and IGTPL. The agreement stipulated that the employees would continue to be under the same conditions of employment; their wages will not be reduced and promotions etc. which are their rights would not be affected. The salary and all other benefits were to be paid by only IGTPL and the employees ceased to be the employees of the appellant. The arrangement is co-terminus with the period during which IGTPL would run the Rajiv Gandhi Container Terminal (RGCT)(container terminal). After going through the terms of agreement, we find that as contended by the learned counsel, this is nothing but handing over the operations of the container terminal and in the absence of any payment required to be made by IGTPL to the appellant for supply of man power and in view of the relationship between the employees and IGTPL being one of master and servant, it cannot be said that appellants have provided the manpower supply services to the IGTPL. Therefore we consider that the appellants have made a strong case in their favour and this demand cannot be sustained. - Decided in favor of assessee. Renting of immovable property - Held that - Appellant is not contesting the taxability but their grievance is that service tax has been demanded even on the amount not received by them but deposited with the court because of litigation. The service tax is payable only on receipt of the service charges and therefore proportionate demand relating to the demand on the amount not received may not be sustained. - Matter remanded back - Decided in favour of assessee.

Summary

Issues involved:
Delay condonation, remand requirement, service tax demand, penalties imposition, manpower supply service, leasing of land, boat registration, auction proceeds taxability, CENVAT credit availment.

Delay Condonation:
The appellant sought condonation of a 12-day delay, which was explained to the satisfaction of the tribunal, leading to the condonation of the delay.

Remand Requirement:
After hearing both sides, the tribunal found the matter required remand, waiving the pre-deposit requirement and taking up the appeal for final disposal.

Service Tax Demand and Penalties Imposition:
A service tax of Rs. 11,73,88,886/- with interest was demanded for the period from 01/04/2010 to 31/03/2011, with penalties imposed under Section 76 and Rule 15 of CENVAT Credit Rules.

Manpower Supply Service Issue:
The major demand was based on the appellant providing manpower supply service. However, after reviewing the agreement between the appellant and IGTPL, it was concluded that the appellants did not provide manpower supply services, as the employees were transferred to IGTPL with no payment required from IGTPL to the appellant.

Leasing of Land Issue:
Regarding the leasing of land, while the appellant accepted liability and paid tax for a portion leased to Ambuja Cements, the tribunal requested the Commissioner to consider the portion of demand already covered by other show-cause notices and pending before the Tribunal.

Boat Registration Issue:
The issue of boat registration, being small in amount, was not contested by the appellants and was upheld as not contested.

Auction Proceeds Taxability Issue:
The appellant did not contest the taxability of auction proceeds but raised concerns about service tax being demanded on amounts not received but deposited with the court due to litigation. The tribunal set aside the demand on the amount not received.

CENVAT Credit Availment Issue:
There was a lack of clarity regarding the availment of CENVAT credit by the appellant. While a portion of the demand was accepted and reversed, there was a dispute about the balance. The tribunal requested the Commissioner to reconsider the issue and come to an appropriate conclusion after considering the submissions.

Conclusion:
The impugned order was set aside, and the matter was remanded to the original adjudicating authority for fresh consideration of all issues, with appellants given a reasonable opportunity to present their case.