Custom, Excise & Service Tax Tribunal
M/S. Creative Marine Services vs Cce Mumbai I on 3 August, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. ST/52/06 Mum
Arising out of Order-in-Appeal No. BR (61)61/STC/2005 dated 21.12.2005 passed by the Commissioner of Central Excise (Appeals), Mumbai I.
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial)
Honble Shri Sahab Singh, Member (Technical)
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 :
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. Creative Marine Services
:
Appellant
Versus
CCE Mumbai I
Respondent
Appearance Shri Prakash Shah, Advocate for appellant Shri A.K. Prabhakar, JDR For Respondent CORAM:
Shri Ashok Jindal, Member (Judicial) Shri Sahab Singh, Member (Technical) Date of Hearing : 03.08.2011 Date of Decision : 03.08.2011 ORDER NO.
Per Ashok Jindal The appellant is in appeal against the impugned order confirming demand of service tax under the category of Management Consultants Services along with interest and various penalties under the Finance Act, 1994.
2. The facts of the case are that the appellant has registered themselves with Service Tax department as Manpower Recruitment Agency in 1997 and were paying service tax and filing service tax returns till July 2001. On 06.02.1998, the appellant had filed a request for cancellation of their registration, which was denied by the department. A show-cause notice was issued in 2004 on the ground that the appellant had entered into an agreement on 01.04.2003 for providing the service of recruitment and supply of officers and crew etc. on board ship owned by M/s. Great Eastern Shipping Co. Ltd. The show-cause notice alleged that the appellant was rendering Management Consultants Service. As the appellant has not registered themselves under the Management Consultants Service, it was proposed that service tax is chargeable on the gross value of the services and service tax is leviable on the entire amount including reimbursable expenses. The show-cause notice was adjudicated and demand of service tax was confirmed along with interest and various penalties under the Finance Act, 1994. The said order was challenged before the Commissioner (Appeals) who confirmed the adjudication order. Being aggrieved by the order, the appellant is in appeal before us.
3. Shri Prakash Shah, learned Advocate appeared for the appellant submitted that the activity of the appellant was well within the knowledge of the department and the period involved in this case is from April 2003 to March 2004 and the show-cause notice has been issued on 10.06.2004, therefore the period in dispute is not covered under normal period of limitation. He further submitted that the appellant is registered under manpower supply services and, in fact, the appellant is providing the said services and not the Management Consultants Services. The appellant is registered with the Service Tax department under the category of Manpower Recruitment Services with effect from 7.7.1997 and paying service tax accordingly. Although the Management Consultants Service came into service tax net with effect from 16.10.1998 but never the appellant was asked to pay service tax under the Management Consultants Services. He further submitted that as per CBEC Circular No. B.43/5/97-TRU dated 02.07.1997 and Trade Notices No. 7/97-ST dated 04.07.1997 and 7/98-ST dated 13.10.1998, while paying service tax, the appellant is not required to include reimbursable expenses in the taxable services. As the appellant has already paid service tax under the category of Manpower Recruitment Services, the appellant cannot be asked to pay service tax twice on the same activity. He further submitted that the activity undertaken by the appellant is more appropriately covered under Ship Management Services which came into service tax net with effect from 01.05.2006. Therefore, the appellant was not liable to pay service tax at all till 30.04.2006 neither under Management Consultants Service nor under Manpower Recruitment Services. He further submitted that in the appellants own case for the subsequent period i.e. April 2004 to March, 2005, a show-cause notice was issued wherein the proceedings were dropped against the appellant holding that the activity undertaken by the appellant does not cover under the Management Consultant Services. Therefore, the impugned order is liable to be set aside. In support of his contention he relied on the decision in the case of Indian National Shipowners Association vs. Union of India 2009 (14) STR 289 (Bom.) and SAP India Pvt. Ltd. vs. CCE Bang II 2011 (21) STR 3030 (Tri. Bang.). He also relied on the decision in their own case vide order-in-original No. 1/ST/SJS/06 dated 21.04.2006 for subsequent period.
4. On the other hand, the learned JDR reiterated the impugned order and submitted that as per the agreement, the services undertaken by the appellant is in nature of Management Consultants Service, the lower appellate authority has rightly classified the services of the appellant under Management Consultants Services and, therefore, the appellant is liable to pay service tax on the gross value of the service as taxable services rendered by them.
5. Heard both the sides.
6. On careful consideration of the submissions made by both the sides and on going through the agreement, we find that the appellant has undertaken the following activities:-
a) Short listing and selection of officer and crew as per safe manning scale requirement with requisite adequate qualifications etc.
b) Issuing engagement/employment contract to officer and crew
c) Arrange pre-joining medical examination
d) Prepare and affect crew changes rule
e) Arrange joining and leaving repatriation of officers and crew
f) Maintain pay roll and effect payment of officer and crew
g) Deduction of Income Tax and filing of returns
h) Providing shore supervisor
i) Submit to company crew list, crew change schedules and work cycles of officers and crew etc. In addition to that, the appellant is under obligation to provide services include selection and recruitment of competent officers and crews who have the requisite qualification as per their agreement. The services to be provided by the appellant to their clients are in specific nature of Ship Management Services which has come into force with effect from 01.05.2006 after an amendment in the Finance Act, 2006. We have also gone through the order passed by the Commissioner in the subsequent period in the appellants own case wherein on the same issue, the show-cause notice was dropped holding that the activities undertaken by the appellant are not covered under the Management Consultants Service. It is also a fact on record that the appellant was granted registration on 01.08.1997 under the category of Manpower Recruitment Agency Services which become taxable from 07.07.1997 and the appellant is paying service tax on regular basis and filing their service tax returns. As we have discussed herein above that as the service rendered by the appellant is most specifically covered under Ship Management Services and in the case of Indian National Shipowners Association (supra), the Honble Bombay High Court has held that introduction of new entry and inclusion of certain services in that entry would presuppose that there was no earlier entry covering such services. Therefore, prior to introduction of particular entry the services rendered by the appellant was not taxable. Creation of new entry is not by way of amending the earlier entry. It is not a carve out of the earlier entry. Therefore, the services rendered by the appellant cannot be brought to tax under that entry. Although the show-cause notice for subsequent period has been dropped by holding that the activity undertaken by the appellant does not cover under the Management Consultants Service on merits, the activities of the appellant are specifically covered under Ship Management Service which came into force with effect from 01.05.2006. Therefore, we hold that during the impugned period the activity undertaken by the appellant did not cover under Management Consultants Service hence, demand of service tax is not sustainable. When demand of service tax is not sustainable, no penalty is leviable on the appellant.
6.1 With these observations, we set aside the impugned order and allowed the appeal with consequential relief, if any.
(Pronounced in open Court) (Sahab Singh) Member (Technical) (Ashok Jindal) Member (Judicial) nsk 6