9911796707
TMI Blog2013 (8) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice tax was payable only on dredging done in any river, port, harbor, backwater or estuary – there is a factual dispute on the issue as to whether any part of the canal can be considered as within the territorial waters or not Site formation service – department contended that this is case of site formation, for which they were expected to recover necessary soil by dredging - Since the contract showed payment for "dredging and land reclamation" – held that:- It is not justifiable to bring them under a different category and demand tax - purpose of the contract is site reclamation and not dredging - the essential character of the contract at this stage is of site formation only - Under the category of Site formation service are spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orts. They are also engaged in various other-related activities like dredging for seaway formation, soil stabilization, land reclamation, site formation for ports etc. 2. For the period 2005-06 to 2008-'09, Revenue made out a case that the applicant had not paid appropriate service tax on certain contracts entered into by them. These disputed services can be broadly listed as under: (i) Dredging done under Sethusamudram project and on which the tax demand is Rs.7.5 crores. (ii) activities relating to building up of Dhamra Port, where the activities done were dredging and reclaiming of land required for making the port. On these activities, the service tax amount computed is about Rs.9.7 crores. (iii) Services of maintenan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . the scope of the entry has been explained as under:- "7. Dredging Services: 7.1 Any service provided or to be provided to any person, by any other person, in relation to dredging is leviable to service tax under sub-clause (zzzb) of Section 65(105) of the Finance Act, 1994. Dredging' has been defined under clause (36a) of Section 65 of the Finance act,1994. "7.2 This taxable service covers dredging which is generally undertaken for removal of material such as silt, sediments, rocks etc., of rivers, ports, harbour, backwater or estuary for providing adequate draught for ships and other vessel and to maintain shipping channels. Service tax is leviable only on dredging of river, port, harbor, backwater or estuary and dredging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence, this service cannot be classified as dredging and it should be classified under site formation in which case it is exempt from tax. 5.3. In the case of Maintenance and repair, service supposed to be imported, the contention of the learned counsel is that the activity for which the main demand is made was done in Singapore. Such activity can be subjected to tax under Section 66A only if the service was partly performed in India. The Contention is that the dredger had gone to Singapore and it was repaired there and, therefore, there can be no service tax demand on that service. He submits that the show-cause notice alleges that the dredging activity was done in India and, therefore, the repair of the dredger done in Singapore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... canal, shipping channels etc. He submits that the circulars issued by the Board restricting the meaning of the provisions of Finance Act, 1994 hence has no legs to stand in the eye of law as decided by the Larger Bench of the Tribunal in Agarwal Colour Advance Photo System Vs Commissioner of Central Excise, Bhopal reported in 2011 (23) S.T.R 608 (Tri.- LB) it should not be taken note of. 6.2 In the case of Dhamra Port, he submits that the contract records the activity that payments have to be made for dredging and reclamation. It is indivisible contract and, therefore, it should be classified as dredging and, therefore, the tax has been demanded correctly. The learned counsel for the applicants submits that they have entered into three c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done in any river, port, harbor, backwater or estuary. Any order to make pre-deposit on such an issue will disturb the balance of convenience drastically against the applicant and we are not inclined to do so. There is also a factual dispute on the issue as to whether any part of the canal can be considered as within the territorial waters or not. 7.2 In the case of Dhamra Port, the contract says that the purpose of the contract is site reclamation and not dredging. Therefore, the essential character of the contract as we can see at this stage is of site formation only. Under the category of Site formation service such activities are specifically mentioned and are also exempted. That being the case, it is not justifiable to bring them und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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