2018 (3) TMI 1384 - AT - Service Tax

Change in tax entry - classification of service - provision of Multi Purpose Support Vessel (MSV) to ONGC and L&T on charter hire basis - case of Revenue is that prior to 16/05/2008 the service should be taxed under different entry, namely, BSS - whether taxable under Business Support service or under supply of tangible goods? - Held that - Tribunal in Diebold Systems (P) Ltd. Vs. CST, Chennai 2007 (11) TMI 93 - CESTAT, CHENNAI held that in case of introduction of new tax entry without amending the pre-existing tax entry it cannot be said that the same activity will be liable to tax under pre-existing as well as new entry - there is no merit in the contention of the Revenue for the tax liability of the appellant in respect of supply of tangible goods prior to 16/05/2008. Eligibility of the appellant/assessee for concession under N/N. 12/2003 - Held that - There is nothing in the present appeal to state that the Notification 12/2003-ST is not available because of existence of different facts which are evidenced. Penalty u/s 76 and section 78 - Held that - the proceedings itself should have closed under Section 73 (3) as the service tax liability alongwith interest has been discharged prior to issue of show cause notice - penalty set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Dispute over service tax liability related to provision of Multi Purpose Support Vessel (MSV) to ONGC and L&T on charter hire basis.
2. Valuation dispute of management service provided by the appellant on offshore supply vessels of ONGC.

Analysis:

Issue 1:
The Revenue contested the dropping of demand for the period before 16/05/2008 under "business support service" (BSS) and the dropping of demand based on extending benefit under Notification 12/2003. The Tribunal held that the service provided by the appellant falls under the category of supply of tangible goods service, effective from 16/05/2008, and cannot be taxed under BSS for the period before this date. The Tribunal referred to a previous decision to support this conclusion, emphasizing that the same activity cannot be taxed under two different entries for different periods. The Tribunal found no legal basis for the Revenue's contention and dismissed the appeal on this issue.

Issue 2:
Regarding the eligibility of the appellant for abatement under Notification 12/2003, the Tribunal noted that the Original Authority had thoroughly examined the terms of the notification, along with supporting evidence, and concluded that the appellant was eligible for the abatement. The Revenue failed to provide significant grounds in their appeal to challenge this factual finding. The Tribunal found no reason to interfere with the Original Authority's decision on this matter, as the evidence supported the eligibility for the abatement.

Penalty Imposition:
The Tribunal addressed the non-imposition of penalty under Section 78, noting the reasons recorded by the Original Authority. The Tribunal found that there was no evidence of intentional evasion of service tax by the appellant, and the delay in payment was attributed to factors beyond their control. As a result, the Tribunal invoked Section 80 for the waiver of penalty under Section 76, considering the reasonable cause for the delay in payment. The appeal filed by the Revenue was dismissed, and the appellant's appeal was allowed based on the detailed analysis and findings.

In conclusion, the Tribunal provided a comprehensive analysis of the issues related to service tax liability and valuation disputes, ultimately dismissing the Revenue's appeal and allowing the appellant's appeal based on the legal and factual considerations presented during the proceedings.