2016 (12) TMI 602 - AT - Service Tax

Pre-deposit - Maintenance of ships - Annual Maintenance Contract - Materials supplied for rendering Services to Naval ships - Works Contract Service - Held that - Taking into account the facts and circumstances of the matter, we feel that an amount of ₹ 25 lakhs, including the amount of ₹ 4,51,492/- already paid up by the appellant, would meet the ends of justice. The said amount should be paid up within a period of four weeks from today failing which the appeal is liable for dismissal for non-compliance of provisions of Section 35F. Report for compliance on 08/12/2016 - stay granted partly.

Summary

Issues:
1. Service tax liability on maintenance of ships
2. Service tax liability on annual maintenance contract
3. Service tax liability on materials supplied for rendering services to Naval ships
4. Service tax liability on works contract service

Analysis:
1. The appellant, registered under Management, Maintenance, or Repair Services and Erection, Commissioning, or Installation Service, faced a dispute regarding the demand of service tax liability. The issue revolved around the maintenance of ships, with a sum of ?45,33,465/-, where the Department contended that the services were not provided within the port, thus disqualifying them from availing benefits under Notification No.31/2010-St dt. 22/06/2010.
2. Concerning the Annual Maintenance Contract (AMC), the appellant had already paid the disputed amount of ?4,84,239/- and did not contest the liability. Additionally, an amount of ?4,51,492/- along with interest of ?40,015/- had been deposited but not appropriated by the lower authorities. The appellant sought a stay with a full waiver.
3. A portion of the demand, amounting to ?33,67,401/-, was attributed to materials purchased by the appellant and supplied for services to Naval ships. The appellant argued that this should be considered a trading activity, thus exempting it from service tax liability. The Department, represented by the learned AR, opposed the stay and requested a suitable pre-deposit.
4. After hearing both parties, the tribunal decided that an amount of ?25 lakhs, inclusive of the already paid sum of ?4,51,492/-, would suffice to meet the ends of justice. The appellant was directed to pay this amount within four weeks; failure to comply would result in the dismissal of the appeal for non-compliance with the provisions of Section 35F. Compliance report was set for 08/12/2016.