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2023 (10) TMI 318 - AT - Service TaxLevy of Dredging Services provided to Dredging Corporation of India (DCI) for Sethu Samudram Project and Dhamra Port Company Ltd., and also on certain services imported - penalties - HELD THAT - he demand of Service Tax confirmed under the category of Dredging services at Dhamra Port, on the consideration received for activities of Soil Stabilisation and Land Reclamation has been decided by the Tribunal in the appellant s own case INTERNATIONAL SEAPORT DREDGING LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI 2018 (6) TMI 933 - CESTAT CHENNAI . It was explained by the appellant that three separate contracts for dredging, soil stabilisation and land reclamation were entered by them. In the present case also the demand is made under dredging services on amounts received for soil stabilisation and land reclamation services at Dhamra Port. In paragraph 14.2.0, the adjudicating authority has held that the activities undertaken were not stand-alone and therefore, the contract has to be considered as composite one. The Notification No. 17/2005-ST dated 07.06.2005 exempts site formation services (soil stabilisation, land reclamation) provided in the course of construction of road, airports, railways, transport terminals, bridges, tunnels, dams, major and minor ports. After considering the agreement, the original authority in the above extracted order has come to the conclusion that the consideration received for site formation services is exempted under the above Notification and cannot be subject to levy of Service Tax under dredging services. The facts entirely being the same, the demand of Service Tax under the category of dredging services for the amount received by the appellant for soil stabilisation and land reclamation services cannot sustained and requires to be set aside. Whether the service offered by the appellant to Dredging Corporation of India by way of charter-hire of vessel for dredging work of the Sethu Samudram Canal Project? - HELD THAT - The very same issue was considered by the Tribunal in the appellant s own case for the earlier period INTERNATIONAL SEAPORT DREDGING LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI 2018 (6) TMI 933 - CESTAT CHENNAI wherein it was held that the charter/hire of vessel would at the best fall under Supply of Tangible Good Services and not under dredging services - Following the same, the demand of Service Tax on amount received by the appellant upon the charter-hire agreement under the category of dredging services cannot sustain and requires to be set aside. Demand of Service Tax under Maintenance and Repair Services received from the Foreign Service provider - HELD THAT - The levy of Service Tax on Maintenance and Repair Services is on the basis of the place of performance and therefore the demand cannot be sustained as the services have been performed outside India and not received in India - the demand under this category cannot sustain and requires to be set aside. Demand of Service Tax on reverse charge basis under the category of Manpower Recruitment and Supply Agency (MRSA) services received from Foreign Service providers - HELD THAT - The issue as to whether secondment agreement entered by the appellant with the foreign companies for deputation of employees would come within the ambit of the definition of Manpower Recruitment And Supply Agency services was analysed by the Hon'ble Apex Court in the case of C.C.,C.E. S.T. BANGALORE (ADJUDICATION) ETC. VERSUS M/S NORTHERN OPERATING SYSTEMS PVT LTD. 2022 (5) TMI 967 - SUPREME COURT holding that the activity may be taxable under MRSA - the demand under this category is sustainable, and the same is upheld. Penalties - HELD THAT - The appellant has made out sufficient cause for non-payment of Service Tax and is a fit situation to invoke Section 80 of the Finance Act, 1944 to set aside the penalties. Appeal allowed in part.
Issues Involved:
1. Demand of Service Tax on Soil Stabilisation and Land Reclamation Services. 2. Demand of Service Tax on Charter-Hire of Vessel to Dredging Corporation of India. 3. Demand of Service Tax on Maintenance and Repair Services received from Foreign Service Providers. 4. Demand of Service Tax on Manpower Recruitment and Supply Agency Services. Summary: 1. Demand of Service Tax on Soil Stabilisation and Land Reclamation Services: The Tribunal considered whether the services provided at Dhamra Port were classifiable as 'Dredging Services' or 'Site Formation Services'. The appellant argued that soil stabilisation and land reclamation activities were exempt under Notification No. 17/2005-ST as 'Site Formation Services'. The Tribunal noted that similar issues were previously decided in favor of the appellant, confirming that these activities are exempt from Service Tax. Consequently, the demand under the category of 'Dredging Services' was set aside. 2. Demand of Service Tax on Charter-Hire of Vessel to Dredging Corporation of India: The appellant provided dredgers on charter-hire to the Dredging Corporation of India. The Tribunal had previously ruled that such activities fall under 'Supply of Tangible Goods for Use' and not 'Dredging Services'. Following this precedent, the Tribunal set aside the demand for Service Tax under 'Dredging Services' for the charter-hire of vessels. 3. Demand of Service Tax on Maintenance and Repair Services received from Foreign Service Providers: The appellant engaged foreign service providers for repair work performed outside India. The Tribunal noted that maintenance and repair services are performance-based and, since the services were performed outside India, they are not taxable under the reverse charge mechanism. The demand for Service Tax under this category was therefore set aside. 4. Demand of Service Tax on Manpower Recruitment and Supply Agency Services: The Tribunal upheld the demand for Service Tax on Manpower Recruitment and Supply Agency (MRSA) services, following the Supreme Court's decision in the case of Commissioner of Customs, Central Excise and Service Tax, Bangalore vs. M/s. Northern Operating Systems Pvt. Ltd. However, the Tribunal recognized that the issue was interpretational and had previously been decided in favor of the appellant. Consequently, the penalties imposed were set aside under Section 80 of the Finance Act, 1944. Conclusion: The impugned order was modified as follows: - The demand of Service Tax for soil stabilisation and land reclamation activities at Dhamra Port was set aside. - The demand of Service Tax on charter-hire of vessels to Dredging Corporation of India was set aside. - The demand of Service Tax on maintenance and repair services performed outside India was set aside. - The demand of Service Tax on Manpower Recruitment and Supply Agency services was upheld, but penalties were set aside. The appeals were partly allowed in these terms.
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