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TMI Blog2013 (2) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... ses, Section 65A(2)(a) says “the sub-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description. There is a specific inclusion of providing of crews under Section 96(96a)(ii) meant for ship management service. Whereas there is no such inclusion in BSS. Therefore the supply or providing of seafarers to ESMPL, a foreign Company, would definitely classifiable under ship management service. Further they fall under Export of service as these services satisfy the condition prescribed in terms of Rule 4 read with Rule 3 and hence can be exported without payment of tax. C.B.E. & C.’s Circular No. 111/05/2009-S.T., dated 24-2-2009, it is clarified that for category III services (Rule 3(1)(iii)) the relevant factor is the location of the service receiver and not the place of performance and in the instant case it is admitted that the location of service receiver is outside India – Aappellant is not liable to pay Service tax for the surviving demand period. Notification No. 4/2004-S.T. clearly exempts all taxable services provided to a Developer of SEZ or a SEZ unit for consumption of the services within such SEZ. - whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement effective from 1-9-2006 to 31-8-2009, Crescent was appointed as an agent to the principal, M/s. Red Eagle Ship Management Pvt. Ltd., a company incorporated in Singapore. 1.2 As per the agreement, it appeared that the services rendered by the appellant includes every service provided in relation to the business activity of its Principal, M/s. Eagle Ship Management Private Ltd., which falls under the category of Business Support Service, is a taxable service as per Section 65(105)(zzzq) of the Finance Act, 1994. During the period from September 2006 to December 2007, the appellant had received a taxable income of Rs. 1,03,06,897/- from its principal and the Service tax liable to be paid by the appellant works out to Rs. 12,67,744/-. 1.3 During the course of Audit it was also ascertained that the appellant had not paid Service tax for the services rendered to units situated in SEZ. The SEZ services consumed inside the SEZ area alone are exempted from payment of Service tax as per Notification 4/2004-S.T., dated 31-3-2004 and hence, it appears that the Steamer Agent Services rendered by the appellant outside the SEZ notified area are liable to Service tax. The total Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le for exemption of this Notification; (vi) that the period involved for the first issue is from 1-9-2006 to 31-12-2007, whereas the notice was issued on 2-7-2008 and therefore the part of the demand is time-barred as the issue involved is classification dispute and they bonafidely believed that no Service tax is payable on account of export of service. 4. Personal Hearing was held on 8-6-2011. Ms. Uma Maheswari, Advocate, appeared before me on behalf of the appellant. None has appeared from the department side, despite intimation. 4.1 The advocate, during the hearing, in addition to reiterating the submissions made already in the appeal memorandum, she has submitted the following points : (a) That this is an issue where the department wants to classify the impugned service under Business Support Service whereas her client s classify the same under Ship Management Service and as the service is consumed abroad, as an export service, her client is not liable to pay Service tax. (b) As the issue involved is interpretation of classification of service, imposition of penalty under Section 78 is not also sustainable. (c) As regard confirmation of tax for the servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial issue and non admitting of the new plea would jeopardize the rights of the appellant. Besides, as rightly pointed out by the appellant, the SCN itself mentions two different classifications at different places. Therefore there is nothing wrong in admitting the new plea of the appellant at the appellate stage. The main arguments of the appellant are : that though the agreement appears to be composite in nature, essentially is an agreement for providing crews for the ships belonging to the principal (ESMPL); that the Joint Commissioner has classified the service under BSS based upon the appellant s service were provided to the representatives of the principal, whereas the Joint Commissioner has failed to see that the services were provided to the representatives on behalf of principal for carrying out the primary and essential service viz. providing seafarers or crews (seafarers) to the ship belonging to the principal; that BSS is related to provisions of infrastructural facilities apart from providing support services to business, but the primary and essential nature of service is providing crews to the ships; that ship management service under Section 65(96a) includes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the argument sake, the above version is not acceptable, in terms of Section 65A(2)(b) also, the providing of seafarers could be classified under ship management service since the essential service is providing of crew members (seafarers) to the ship owned, managed and controlled by a foreign company i.e ESMPL. Therefore, as rightly contended by the appellant, providing of seafarers (crew members) in terms of written agreement, is classifiable under ship management service only. The LAA has not given enough discussion on the question of classification. He has simply gone by the presence of ESMPL s representative in India which is not correct. Their presence is ancillary in nature to fulfil the main service namely providing of seafarers (crews). In fact the LAA should have gone into the details of billing system. If there is a split up bills for providing infrastructure facilities, the LAA should have charged Service tax under BSS as the same is provided in India excluding the bill amount representing supply of seafarers. 5.5 The next issue to be seen is whether the appellant has exported the service and if so whether he is eligible to exempt from payment of Service tax. Once it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so seen that the SEZ Act has an overriding effect by virtue of Section 51 which provides that Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument have effect by virtue of any law other than this Act. In view of this specific provision, if the appellant is held ineligible for availing Notification No. 4/2004-S.T. considering its wordings i.e. consumption of services within SEZ, it could be treated as inconsistent notification. 5.9 In this era of liberalized economy and single window clearances to industry, it would definitely not be the intention of the Government to deny certain benefit available under a Notification issued under one Act on the one hand and to extent benefit under different provisions for the same transaction on the other hand. 6. With regard to the imposition of penalty by the Lower Adjudicating Authority, I hold that since demand does not survive the question of imposing penalty will not arise. 7. In view of the above discussions and conclusions arrived at, I pass the following order (i) The extended period of time under Section 73(1) of the Finance Act is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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