Custom, Excise & Service Tax Tribunal
M/S Safe & Sure Marine Services Pvt. Ltd vs Commissioner Of Service Tax, Mumbai on 31 August, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. ST/116/10 (Arising out of Order-in-Original No. 19/STC/BR/09-10 dated 10.12.2009 passed by the Commissioner of Service Tax, Mumbai). For approval and signature: Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Safe & Sure Marine Services Pvt. Ltd. Appellant Vs. Commissioner of Service Tax, Mumbai Respondent Appearance: Shri Prakash Shah, Advocate for Appellant Shri V.K. Agarwal, Addl. Commissioner (AR) for Respondent CORAM: SHRI P.R. CHANDRASEKHARAN, MEMBER (TECHNICAL) SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 18.07.2013 Date of Decision: .2013 ORDER NO. Per: P.R. Chandrasekharan
The appeal is directed against the Order-in-Original No. 19/STC/BR/2009-10 dated 10.12.2009 passed by the Commissioner of Service Tax, Mumbai.
2. The facts for consideration of this case are as follows: -
(i) Acting on intelligence, the officers of Directorate General of Central Excise Intelligence (DGCEI), Mumbai searched the premises of the appellant, M/s Safe & Sure Marine Services Pvt. Ltd., on 23.11.2006 and recovered incriminating documents under a Panchnama. It was noticed that the appellant had been rendering manpower supply services to various shipping companies such as M/s ABG Shipping, M/s Pranik Shipping, M/s South India Corporation Agency Ltd. (SICAL), M/s Essar, amongst others and were in receipt of sums of money towards the wages/salaries of the officers and crew members so supplied in addition to service charges for the service rendered. The department was of the view that the services undertaken by the appellant were liable to be taxed under the category of Manpower Recruitment or Supply Agency Services for the period prior to 1.5.2006 and under the category of Ship Management Services w.e.f. 1.5.2006. The agreement entered into by the applicant indicated the following namely: -
(a) The appellant is appointed as the Manning Contractor.
(b) The appellant has to arrange for Master, Officers and Crew on-board the vessel as required under Merchant Shipping Act, 1958 and any other International Maritime Act and as per manning standards.
(c) The Officers and Crew so supplied remain as employees of the appellant.
(d) The appellant would provide victualling and housekeeping services, and
(e) The appellant would be paid consolidated charges per calendar month.
(ii) The statements of Managing Director, Accounts Assistant and Director 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 Manpower Recruitment or Supply Agency Service for the period prior to 1.5.2006 and under Ship Management Service w.e.f. 1.5.2006 under the provisions of Section 73 of the Finance Act, 1994. Interest was also demanded under Section 75 of the said Finance Act and the show-cause notice also proposed imposition of penalties under Sections 76, 77 and 78 of the said Finance Act.
(iv) The show-cause notice was adjudicated vide the impugned order and the adjudicating authority confirmed the service tax demand of Rs.1,81,63,718/- along with interest thereon at appropriate rates. He also imposed penalty @ Rs.100/- per day till 17.4.2006 and @ Rs.200/- per day after 17.4.2006 under the provisions of Section 76 of the Finance Act, 1994 and a penalty of Rs.1000/- under Section 77. He also imposed a penalty of Rs.1,82,00,000/- under Section 78 of the Finance Act, 1994. The appellants are before us against the said order.
3. The learned Counsel for the appellant makes following submissions: -
(i) Services rendered by the appellant prior to 1.5.2006 are not taxable under Manpower Recruitment or Supply Agency Service and the services rendered by them are correctly classifiable under Ship Management Services w.e.f. 1.5.2006.
(ii) For the period subsequent to 1.5.2006, M/s SICAL, the main contractor has paid Service Tax on the entire amount and they were only sub-contractors and, therefore, they are not required to pay any Service Tax as the main contractor has discharged the Service Tax liability.
(iii) With regard to services rendered to M/s ABG Shipping Co., though they have recovered Service Tax from the customers, they are not required to discharge the Service Tax liability to the exchequer, as Section 73A which mandates deposit of Service Tax with exchequer in respect of Service Tax collected from the customers came into force only from 18.4.2006 and, therefore, they are not liable to discharge any Service Tax liability even though they have recovered the Service Tax from their customers.
(iv) It is also their contention that they are not required to discharge Service Tax liability on the emoluments recovered from the customers towards supply of manpower and if at all, the Service Tax liability should be confined only on the service charges received for supply 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 contentions.
3.2 The ld. Counsel also 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 Excise, Mumbai 2007 (7) STR 546 (Tri-Mum) and the decision of the Hon'ble Bombay High Court in the case of Indian National Ship-owners Association Vs. Union of India 2009 (14) STR 289 (Bom), wherein it has been held that creation of a new entry would imply that the services covered by the new entry were not taxable prior to the date.
3.3 Since ship management services were brought under the tax net with effect from 1-5-2006, which covered supply of manpower for manning the ships, the said activity is not taxable prior to the said date. Since the show cause notice itself demands service tax on the activity undertaken by them under ship management services for the period effective from 1-5-2006, service tax cannot be demanded on the said service rendered under the category of manpower recruitment or supply service for the earlier period in view of the decisions cited above.
4. Shri. V.K. Agarwal, learned Addl. Commissioner (A.R.) appearing for the Revenue, on the other hand, strongly opposes these contentions and submits that the services rendered by the appellant to the shipping companies are squarely covered under Manpower Recruitment or Supply Agency Service and, therefore, for the period from 16.6.2005 to 30.4.2006, Service Tax is liable to be paid by the appellant under the said category and for the period w.e.f 1-5-2006, service tax is liable to be paid under ship management services. He relies on the Boards Circular No. 334/1/2008-TRU dated 29.2.2008, wherein it has been clarified that specifying a service separately as a taxable service does not necessarily mean or suggest that services falling within the scope of newly specified service were not earlier classifiable under any one of the existing taxable services. He also relies on the judgment of the Tribunal in the case of Jetlite (India) Ltd. Vs. Commissioner of Central Excise, New Delhi reported in 2011 (21) STR 119 (Tri-Del) in support of the above contention. He also points out that the appellant had collected Service Tax from M/s ABG Shipping Co. but had not deposited the same to the exchequer and in respect of M/s SICAL, the appellant at the first instance issued invoices charging Service Tax but later on issued another set of invoices without Service Tax bearing the same serial numbers as the earlier one. The conduct of the appellant clearly indicates that the appellant were aware 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 the 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 appellants 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 points out that in the case of Jetlite (India) Ltd. Vs. Commissioner of Central Excise, New Delhi 2011 (21) STR 119 (Tri-Del), this Tribunal had held that - there can hardly be any quarrel about the proposition that introduction of specific entry does not mean that the subject covered by the specific entry was not covered by general entry prior to the introduction of specific entry. He also avers that it is a well settled principle of judicial interpretation that nothing can be construed in such a manner as to render the words of any legislation meaningless or redundant.
4.3 As regards the invocation of extended period for confirmation of service tax demand, the learned AR submits that it was fully in the knowledge of the appellant that their activity was liable to Service Tax and the appellant had charged and collected Service Tax from one of their clients, namely, M/s ABG Shipping but did not deposit the tax with the department. However, after the start of investigations, the amount of Service Tax collected was paid. In respect of another client, namely, M/s SICAL, the appellant at the first instance issued invoices charging Service Tax but later on issued another set of invoices without Service Tax and both the invoices bore the same number. Similarly, in the case of M/s Pranik Shipping, the appellant charged and recovered Service Tax but did not deposit the same with the department and the non-payment was done on the instructions of their client. For the period prior to 1.5.2006, there is no dispute about the taxability of the appellants activity. Service Tax of Rs.66,97,365/- has not been paid by the appellant in respect of the services provided to M/s SICAL on the plea that they are only a sub-contractor and Service Tax has been paid by M/s SICAL. Since the appellant is a service provider and M/s SICAL is a service receiver and it is the appellants responsibility to discharge Service Tax liability to the Govt. This issue has also been settled by the CBE&C vide Circular No. 96/7/2007-ST dated 23.8.2007, wherein, it has been clarified that Service Tax is leviable on any service provider, whether in the capacity of a sub-contractor or a contractor and it is the service provider who has to discharge Service Tax liability. Reliance is placed on the decisions of the Tribunal in the case of SEW Construction Ltd. Vs. Commissioner of Central Excise, Raipur 2011 (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 be 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 Finance Act, 1994 defines Manpower Recruitment or Supply Agency Service as follows: -
Manpower Recruitment or Supply Agency means any person engaged in providing any service directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to a client. The taxable service is defined under Section 65(105)(k) of the said Finance Act as any service provided or to be provided to a client, by the Manpower Recruitment or Supply Agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner.
5.3 In the present case, there are agreements entered into with the clients for recruitment and supply of manpower. We have perused these agreements. As per the agreement entered into with M/s ABG Shipping Ltd, vide agreement dated 1.4.2002, the responsibility of the appellant was for providing the necessary competent, certified and experienced personnel so as to ensure efficient running and maintenance of the vessel and the appellant, as Manning Contractor, agreed to provide to the owner of the such vessel such personnel for the said purpose on the terms and conditions mutually agreed upon. Clause 3.1 of the said agreement makes it absolutely clear that the appellant was required to provide certified and experienced officers/crew to the owner of the vessel and the charges were collected for the various categories of crew deployed on per man per day basis as provided in clause 3.12 of the agreement in addition to a consolidated sum of Rs.4.64 lakhs per calendar month towards supply of 8 officers and 8 crews in terms of clause 5.1 of the agreement. Clause 6.1 also makes it clear that the crews engaged in the ship are the employees of the appellant, who has to ensure payment of wages and other statutory dues, to the employees. Similarly, in the agreement entered into with M/s Pranik Shipping Services Ltd., the appellant was engaged as a Manning Manager for providing competent, certified and experienced personnel on the vessel as required for running and maintenance of the vessel and the agreement was valid for a period of 12 months. The responsibilities included engagement and providing the required personnel including Master, Chief Engineer, other Officers, Petty Officers and crew and to attend to all matters pertaining to their discipline, labour relations, welfare and amenities. 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 under the Merchant Shipping Act, 1958 and the appellant received 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)(k) 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 under Section 65(96a). The said service was defined as follows:-
ship management service includes,
(i) the supervision of the maintenance, survey and repair of ship;
(ii) engagement or providing of crews;
(iii) receiving the hire or freight charges on behalf of the owner;
(iv) arrangements for loading and unloading;
(v) providing for victualling or storing of ship;
(vi) negotiating contracts for bunker fuel and lubricating oil;
(vii) payment, on behalf of the owner, of expenses incurred in providing services or in relation to the management of ship;
(viii) the entry of ship in a protection or indemnity association;
(ix) dealing with insurance, salvage and other claims; and
(x) arranging of insurance in relation to ship; Therefore, the services of engagement or providing of crews for ships became classifiable under Section 65(96a). That does not mean that for the period prior to 1.5.2006, the service was not taxable at all.
5.5 It is also on record that the appellant has collected Service Tax from some of his customers such as M/S ABG Shipping Co. and M/s Pranik Shipping without remitting the same to the exchequer. This shows that he was fully aware of his Service Tax liability. In respect of M/s SICAL, invoices were issued initially indicating Service Tax liability but on the advice of M/s SICAL, invoices bearing the same numbers and other particulars were re-issued without indicating Service Tax. Thus, the very conduct of the appellant clearly reveals that the appellant fully well knew that the activity undertaken by him was liable to Service Tax and had also taken precaution by collecting Service Tax from customers wherever they did not object.
5.6 The argument that after 1.5.2006, there is a specific service namely Ship Management Service which covers supply of crew for the ships and, therefore, the activity is liable to be taxed only on or after 1.5.2006 does not stand to any logic or reason. The definition of Ship Management Service includes 10 categories of activity. Supply of manpower was only one of the activities among ten. Even if it were not included, the service would have been taxable under Manpower Recruitment or Supply Agency Service. Section 65A of the Finance Act, 1994, provides that earlier the better principle should be adopted for classification and taxation of service. 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 appellants 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 prior to 1.5.2006 and under Shipping Management 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 case was whether vivisection of a composite activity under Storage and Warehousing Service and Port Services is permissible or not, and it was held that vivisection of composite activity for levy of tax is not permissible. In that context, the Tribunal observed that when Service Tax is made leviable from a particular date, such activity cannot be made taxable under the pre-existing service category. In the Homa Engineering Works case also, the issue for consideration was regarding the liability to pay Service Tax on maintenance and repair works undertaken on ships, whether taxable under Port Services or not. The Tribunal observed that since port service does not specifically cover repair service in its scope, it cannot be held that the activity attracts Service Tax under Port Services. In the Indian National Ship-owners Association case (supra), the issue for consideration before the honble High Court was whether charter hiring of a vessel for off-shore oil exploration purposes would be classifiable under Mining Services or Supply of Tangible Goods for Use Service. The Hon'ble High Court , after going through the contracts/agreements entered into between the parties, held that the activity is more appropriately covered under Supply of Tangible Goods for Use Service and not under Mining Service. The Hon'ble High Court observed that the activity of charter hiring of vessel was neither explicitly nor impliedly covered under Mining Service and, therefore, it could not be included within the scope of Mining Service. It was in that context, the Hon'ble High Court observed that in case a specific entry covering a service has been added at the later point of time, it would imply that the service is taxable only after the specific entry has been introduced and not before. That is not the issue before us. In the present case, prior to 1.5.2006, there were specific entry covering Manpower Recruitment or Supply Service under Section 65(68) read with Section 65 (105)(k) which covered all types of recruitment or supply of manpower, in any manner, whether temporarily or otherwise for all purposes. Thus it is not the case of a specific entry being added at a later point of time. Thus the ratio of these decisions, cannot be applied to the facts obtaining before us in the present case at all.
5.8 This Tribunal in the case of Jay Monofilaments Pvt. Ltd. Vs. CCE, Thane-II 2004 (166) ELT 238 (Tri-Mum), inter alia held that it 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 it 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 Santi Swarup Sarkar vs. Pradeep Kumar Sarkar [AIR 1997 Cal. 197}], it was held that if two interpretations are possible of the same statute, the one which validates the statute must be preferred.
5.9 In Balwant Singh vs. Jagdish Singh [2010(262) ELT 50 (SC)], the honble Apex Court held that It must be kept in mind that whenever a law is enacted by the legislature, it is intended to be enforced in its proper perspective. It is an equally settled principle of law that the provisions of a stature, including every word, have to be given full effect, keeping the legislative intent in mind, in order to ensure that the projected object is achieved. In other words, no provisions can be treated to have been enacted purposelessly. Furthermore, it is also a well settled canon of interpretative jurisprudence that the Court should not give such an interpretation to provisions which would render the provision ineffective or odious. 5.10 In Doypack Systems Pvt. Ltd. [1988 (36) ELT 201 (SC)], the honble Apex Court explained the object of statutory interpretation as follows:-
57. It has to be re-iterated that the object of interpretation of a statute is to discover the intention of the Parliament as expressed in the Act. The dominant purpose in construing a statute is to ascertain the intention of the legislature as expressed in the statute, considering it as a whole and in its context. That intention, and therefore, the meaning of the statute, is primarily to be sought in the words used in the statute itself, which must, if they are plain and unambiguous, be applied as they stand. . 5.11 If we follow these principles laid down by the Hon'ble Apex Court with regard to interpretation of statutes and apply the same to the facts of the present case, it is obvious that the activity undertaken by the appellant, for the period prior to 1.5.2006, has to be held as classifiable under Manpower Recruitment or Supply Agency Service. If that is not done, we would be making the provisions of Section 65(68) read with Section 65 (105)(k) relating to man power recruitment or supply agency service redundant and ineffective so far as such services are rendered to a ship. For the period with effect from 1-5-2006, there is no dispute with regard to the classification of service.
5.12 A more or less identical matter came up before this Bench in the case of Jubilant Enpro 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 excisable goods in the production-distribution chain, they can avail input service credit of the Service Tax paid at the preceding stage by the input service provider. There is no exemption on input service or input service provider under the law. The entire scheme of invoice based Value Added Tax, which is in force, envisages payment of tax at each and every stage of taxable event and availing of credit of tax so paid at the subsequent stage. If this tax regime has to be meaningfully and purposefully implemented, then it is mandatory that the Service Tax liability is discharged as and when taxable services are rendered by the service provider at every stage in the production-distribution chain.
5.14 This very same issue was considered by a larger bench of this Tribunal in the case Vijay Sharma & Co. (supra). In the said case, it was held that- The scheme of service tax law suggest that it is a single point tax law without being a multiple taxation legislation. In the absence of any statutory provision to the contrary, providing of service being event of levy, self same service provided shall not be doubly taxable. If service tax is paid by a sub-broker in respect of same taxable service provided by the stock broker, the stock broker is entitled to the credit of the tax so paid on such service if entire chain of identity of sub-broker and stock broker is established and transactions are provided to be one and the same. . This decision was followed by another co-ordinate bench of this Tribunal in Sew Construction Ltd. case (supra) wherein it was held that we do not find any provision in the Finance Act, 1994 to grant immunity to the sub-contractor from levy of service tax when undisputedly taxable services were provided by them. . Therefore, the argument that since the main contractor is discharging service tax and therefore, the sub-contractor need not pay service tax is without any legal basis and is quite contrary to the concept and practice of Cenvat Credit Scheme and accordingly, we reject this contention totally.
5.15 Another issue raised is whether service tax is payable only on the service charges or on the gross amount charged including the consideration received towards wages/salaries of the personnel supplied to the ships. This issue is well settled by the decisions of this Tribunal and the High Court in (i) Panther Detective Services [2006 (4) STR 116 (Tri.Del)], (ii) Punjab Ex-servicemen Corpn. [2009 (13) STR 529 (Tri. Del)] affirmed by the honble 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 to 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 recipient whether Service Tax should be remitted or not. Similarly, in the case of M/s SICAL, the appellant raised invoices initially including the Service Tax element but later on, at the behest of the service recipient, a second set of invoices were issued with the same serial number but without the service tax element. It is clear from the above that the appellant had the knowledge of his liability to pay Service Tax yet they failed to collect or remit what collected to the exchequer. None of these were informed to the department. 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.
5.17 The last issue for consideration is regarding the penalties imposed on the appellant. Penalties have been imposed under Sections 76, 77 and 78 of the Finance Act, 1994. Penalty under Section 76 has been imposed for the default in payment of Service Tax and under Section 77 for delay in submission/non-submission of ST-3 Returns. Whenever there is default in payment of Service Tax or delay in payment of Service Tax, the provisions of Section 76 are automatically attracted. There is no mens rea is required to be proved for imposition of penalty under the said section as the language of the said section does not prescribe or stipulate any such requirement. Therefore, imposition of penalty under the said Section is sustainable in law. As regards the penalty under Section 77, same is for non-filing of returns and non-compliance to other statutory provisions. In this case also, no mens rea is required to be established and mere violation of the statutory provisions would suffice. Therefore, as held by the honble Apex Court in the Gujarat Travancore Agency case [1989 (3) SCC 52] and Chairman, SEBI vs, Shriram Mutual Fund case [2006-TIOL-72-SC-SEBI], there cannot be any challenge to the imposition of penalties under these provisions. With regard to the penalty equivalent to the amount of Service Tax imposed under Section 78 of the Finance Act, 1994, in the present case as held by us in the preceding paragraphs, the appellant has suppressed 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 honble High Court of Kerala in Krishna Poduval case [2006 (1) STR 185 (Ker)] and the honble Punjab & Haryana High Court in Pannu Property Dealers case [2011 (24) STR 173] have also held that penalties under section 76 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 section 76 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 also uphold the imposition of penalty from the appellant under Section 76, 77 and 78 of the Finance Act, 1994 subject to the modification that for the period with effect from 10.5.2008, penalty under Section 76 is not imposable. The appeal is disposed of in the above terms.
(Pronounced in Court on ..) (Anil Choudhary) (P.R. Chandrasekharan) Member (Judicial) Member (Technical) Sinha 20