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TMI Blog2013 (12) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... board is maintained so that they are able to discharge the functions efficiently. From these contracts/agreements entered into by the appellant with his clients, it is clear that the appellant was engaged in supply of skilled/unskilled manpower. Therefore, the said activity is specifically and clearly covered under 'Manpower Recruitment or Supply Agency Service' as defined under section 65(68) read with Section 65(105)9k) of the Finance Act, 1994 prior to 1.5.2006. - Decided against the assessee. Extended period limitation - Held that:- appellant had collected the Service Tax from the customers but failed to remit the same at the relevant time. - The appellant did not self-assess the tax liability nor did they file any returns declaring the correct and true facts. There is thus gross failure on the part of the appellant. This conduct of the appellant very clearly shows their intention to defy the law and evade Service Tax. Therefore, the extended period of time has been rightly invoked in the present case and accordingly, the Service Tax demand is liable to be upheld. Penalty u/s 78 - Held that:- appellant has suppressed the facts of rendering the service and collection of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector of the appellant firm were recorded under Section 14 of the Central Excise Act read with Section 83 of the Finance Act, 1994, wherein they inter alia stated that they held Service tax registration for Ship Management service from 7.9.2006 and are engaged in providing manning and technical management to their major clients, M/s SICAL,M/s ABG, M/s. Pranik Pravesh and M/s Mecon. They have not received Service Tax from M/s SICAL; in respect of services rendered for M/s Essar Shipping Ltd., they had not discharged the tax liability properly and they would also pay Service Tax liability on the services rendered to M/s ABG Shipping Co. With regard to variation in the invoices submitted in respect of services rendered to M/s. SICAL, initially they had issued invoices for the manning charges with Service Tax element, but without paying the Service Tax to the department and subsequently on the advice of M/s SICAL, they deleted the Service Tax element from their invoices. (iii) On conclusion of the investigation, a show-cause notice was issued to the appellant demanding Service Tax amounting to Rs.1,81,63,718/- in respect of the services rendered to various shipping companies under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of manpower excluding the emoluments received for the manpower supplied by them. (v) The demand is time barred as the notice has been issued much after the normal period of one year. 3.1 The ld. Counsel relies on the judgments of this Tribunal in Creative Marine Services vs. Commissioner of Central Excise, Mumbai-I reported in 2011(24) STR 557 (Tri-Mum) and also on the judgments of this Tribunal in the case of Semac Pvt. Ltd. Vs. CST, Bangalore reported in 2006 (4) STR 475 (Tri-Bang), Synergy Audio Visual Workshop P. Ltd. Vs. CST, Bangalore reported in 2008 (10) STR 578 (Tri-Bang) and OIKOS Vs. Commissioner of Central Excise, Bangalore-III reported in 2007 (5) STR 229 (Tri-Bang) in support of his contention. 3.2 The ld. Counsel relies on the decision of this Tribunal in the case of Gujarat Chem Port Terminal Co. Ltd. Vs. Commissioner of Central Excise, Vadodara-II 2008 (9) STR 386 (Tri-Ahmd) wherein it has been held that, Service Tax is not liable to be paid on the services rendered prior to the introduction of the entry covering the said services. Reliance is also placed on the decision of this Tribunal in the case of Homa Engineering Works Vs. Commissioner of Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of their liability to discharge Service Tax but later on they deleted the Service Tax element from the invoices on the advice of M/s. SICAL. 4.1 The learned A.R. submits that as per the agreements made by the appellant with their clients, the appellant was supplying officers, crew etc. to be shipping companies and these companies were paying a lump sum amount. As per the agreement, the payment of wages to individual officers/crew was the sole responsibility of the appellant and, therefore, the services rendered by the appellant came under the purview of "Manpower Recruitment or Supply Agency Service" during the period 16.6.2005 to 30.4.2006 as defined under Section 65(68) read with Section 65(105)(k) of the Finance Act. With effect from 1.5.2006, a new category of service, namely, 'Ship Management Services' was introduced and engagement or providing of crew was also covered under this service besides many other activities. Therefore, the appellant's activity would get covered under this service from 1.5.2006. However, this does not mean that the activity of the applicant is not covered under "Manpower Recruitment or Supply Agency Service" prior to 1.5.2006. 4.2 The ld. AR poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 (22) STR 666 (Tri-Del) and Vijay Sharma CO. Vs. Commissioner of Central Excise, Chandigarh - 2010 (20) STR 309 (Tri-LB), wherein it has been held that there is no provision under the Finance Act, 1994 to grant immunity to the sub-contractor from levy of Service Tax when undisputedly taxable services were provided by the sub-contractor. In view of the above, it is pleaded that the impugned order is sustainable in law and accordingly, the same is upheld. 5. We have carefully considered the rival submissions. 5.1 The first issue to be decided in this case is whether the services rendered by the appellant is covered within the definition of 'Manpower Recruitment and Supply Agency Service' prior to 1.5.2006. As per the agreement entered into by the appellant with their customers, it is seen that the appellant has to arrange for Master, Officers and Crew on-board the vessels as required under the Merchant Shipping Act, 1958 and any other International Maritime Act and as per manning standards. It is further seen that the crew supplied would remain employees of the appellant and the appellant will be paid consolidated charges every calendar month. 5.2 Section 65(68) of the Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The consideration was paid on per man per day basis for various categories of the personnel supplied in terms of clause 3.13 of the agreement. Thus this agreement also makes it clear that the appellant was engaged in supply of manpower to M/s Pranik Shipping. In the case of M/s SICAL as per the Letter of Intent, the appellant was required to arrange for masters, officers and crew on-board the vessel as required a consideration of Rs.7.10 lakhs per month per vessel and the contract was for a period of one year. The appellant was also responsible to ensure that morale of the crew on-board is maintained so that they are able to discharge the functions efficiently. From these contracts/agreements entered into by the appellant with his clients, it is clear that the appellant was engaged in supply of skilled/unskilled manpower. Therefore, the said activity is specifically and clearly covered under 'Manpower Recruitment or Supply Agency Service' as defined under section 65(68) read with Section 65(105)9k) of the Finance Act, 1994 prior to 1.5.2006. 5.4 With effect from 1.5.2006, the legal provisions underwent a change and a new service called 'Ship Management Services' was introduced un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since 'Manpower Recruitment or Supply Agency Service' came into Service Tax net before 'Ship Management Service', the appellant is liable to discharge service tax liability on the said service rendered by him under the category of 'Manpower Recruitment or Supply Agency Service'. 5.7 The appellant's reliance on Creative Marine Services case (supra) does not support their case. The issue before the Tribunal was whether the appellant should pay Service Tax on the same activity both under the taxable category of 'Management Consultant Service' and 'Manpower Recruitment or Supply Agency Service'. The Tribunal held that on the same activity, Service Tax cannot be demanded twice under two different categories. That is not the issue involved in the present case. There is no demand of service tax twice on the same transaction. In the present case, Service Tax has been demanded under the category of 'Manpower Recruitment or Supply Agency Service' for the period on or after 1.5.2006. Thus, the facts are different and clearly distinguishable. As regards the reliance placed on Gujarat Chem Port Terminal Co. Ltd. (supra), the question for consideration in the said was whether vivisection of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LT 238 (Tri-Mum), inter alia held that " i t is a well settled principle of judicial interpretation that nothing must be construed in such a manner as to render the words of any legislation meaningless or redundant". The appeal against the said decision before the Hon'ble Supreme Court was dismissed as reported in 1990 (45) ELT A33. Similarly, in Vanguard Fire and General Insurance Co. Ltd., Madras Vs. Fraser and Ross - AIR 1960 SC 971, it was held by the Hon'ble Apex Court that -" while interpreting the statute, the Court should avoid repugnancy and should not interpret the statute so as to render anything redundant." In Tirath Singh Vs. Bachittar Singh -AIR 1955 SC 830, the Hon'ble Supreme Court laid down that - the rule of construction should be that any language leading to manifest contradiction should be avoided . Again in the case of Chief Information com Vs. State of Manipur -2012 (286) ELT 485 (SC), while interpreting the scope of provisions of Right to Information Act, 2005, the Hon'ble Apex Court held that -" i t is one of the well known canons of interpretation that no statute should be interpreted in such a manner as to render a part of it redundant or surplusage". In S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... npro Pvt. Ltd. in appeal No. ST/233/12 decided vide Order No. A/419-420/13/CSTB/C-I dated 8-3-2013. One of the issues considered in the said appeal was classification of supply of seafarers to ships, whether under 'Manpower recruitment or supply services' or 'Ship management services' during the period November 05 to December 08. After considering the submissions and the manning contract, this Tribunal came to the conclusion that the service was correctly classifiable under "manpower recruitment or supply service". Therefore, we cannot take a different view in the present case. 5.13 The appellant has also argued that as far as M/s SICAL is concerned, after 1.5.2006, M/s SICAL has discharged the Service Tax liability on the entire amount and, therefore, they are not required to pay Service Tax as they are only sub-contractors. This argument is totally incorrect especially in the context of a Value Added Tax regime, which is prevailing in India. Under the said tax regime, which applies to Service Tax also, the provider of taxable services has to discharge the Service Tax liability. If such services are used as 'input services' by other service providers or manufacturers of excisabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4) STR 116 (Tri.-Del)], (ii) Punjab Ex-servicemen Corpn. [2009 (13) STR 529 (Tri.Del)} affirmed by the hon'ble High Court of Punjab and Haryana [2012 (25) STR (P H)], (iii) Sri. Bhagavathy Traders [2011 (24) STR (Tri.LB) and (iv) Madras High Court decision in GDA Security Pvt. Ltd. [2006 (2) STR 542]. In these decisions, it has been held that the taxable value would be the gross amount charged for the rendering of the service and would include the salaries paid to the workers/personnel provided. Therefore, in the present case also, the same ratio would apply. 5.16 The appellant has raised the issue of time bar with regard to the demand of service tax. From the records, it is evident that in respect of ABG shipping, the appellant had collected the Service Tax from the customers but failed to remit the same at the relevant time. In other words, the appellant knew of their Service Tax liability. Similarly, in the case of Pranik Shipping Services Ltd., the appellant collected the Service Tax but did not remit the same to the exchequer on the instructions of the service recipient. The liability to pay Service Tax is on the service provider and it cannot be decided by the service recip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressed the facts of rendering the service and collection of service tax in a few cases and even where they had collected the Service Tax, they did not remit the same to the exchequer. Therefore, there is suppression and willful mis-statement of facts on the part of the appellant with an intent to evade Service Tax. Hence, the mandatory penalty under Section 78 is justified. The hon'ble High Court of Kerala in Krishna Poduval case [2006(1) STR 185 (Ker)] and the hon'ble Punjab Haryana high Court in Pannu Property Dealers case [2011 (24) STR 173] have also held that penalties under section76 and 78 can be imposed on the same transaction since the ingredients of the two offences which attract penalties under these provisions are distinct and separate. However, as per the amended provisions of Section 78 (w.e.f. 10.5.2008), penalty under Section 76 is not permissible when penalty has been imposed under section 78. Therefore for the period w.e.f. 10.5.2008, penalty under seciton76 will not sustain. To this extent, we modify the imposition of penalties. 6. In sum, we uphold the Service Tax demand confirmed against the appellant in the impugned order along with interest thereon. We a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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