Custom, Excise & Service Tax Tribunal
Commissioner Of Central Tax & Central ... vs Cochin Shipyard Ltd on 6 September, 2024
ST/20989/2018
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 20989 of 2018
(Arising out of Order-in-Original No. COC-EXCUS-000-COM-11-17-18
dated 07.03.2018 passed by the Commissioner of Central GST and
Central Excise, Thiruvananthapuram.)
Commissioner of Central Tax and
Central Excise, Appellant(s)
Central Revenue Building,
I.S. Press Road,
Cochin - 682 018.
VERSUS
M/s. Cochin Shipyard Ltd.,
Perumanoor P.O.,
Cochin.
Respondent(s)
APPEARANCE:
Mr. K.A. Jathin, Deputy Commissioner (AR) for the Appellant. Mr. Kuriyan Thomas, Advocate for the Respondent.
CORAM: HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE MRS. R. BHAGYA DEVI, MEMBER (TECHNICAL) FINAL ORDER NO. 21129 / 2024 DATE OF HEARING: 06.09.2024 DATE OF DECISION: 06.09.2024 PER: D.M. MISRA This appeal is filed by the Revenue against the Order-in- Original No. COC-EXCUS-000-COM-11-17-18 dated 07.03.2018 passed by the Commissioner of Central Excise, GST, Thiruvananthapuram.Page 1 of 6
ST/20989/2018
2. Briefly stated the facts of the case are that the respondent i.e., M/s. Cochin Shipyard Ltd. provider of various taxable services are registered with the department. On scrutiny of their records by the internal audit team and CERA, it came to the notice of the department that they had wrongly availed the benefit of Notification No.25/2012-ST dated 20.06.2012. Consequently, a show-cause notice dated 29.03.2016 was issued to the respondent proposing to recover service tax of Rs.18,85,49,175/- and also Rs.11,162/- as duty short-paid for the period July 2012 to March 2015 with interest and penalty. On adjudication, the learned Commissioner had dropped the demand relating to benefit of Notification No.25/2012-ST dated 20.06.2012 and confirmed demand of Rs.11,162/- with interest and dropped penalty on the respondent. Hence, the present appeal by the Revenue.
3. At the outset, the learned Authorised Representative for the Revenue reiterating the grounds of appeal has submitted that the respondent had rendered services to the vessels of M/s. Lakshadweep Development Corporation Limited (LDCL). They had availed the benefit of Notification No.25/2012-ST dated 20.06.2012 considering the said services provided to Government and consequently, did not pay any service tax. He submits that LDCL is a Government Company registered under the Companies Act, therefore, the said LDCL does not come under the scope of definition of Government or Local Authority or Governmental Authority as per Sl. No.2 of Notification No.25/2012-ST dated 20.06.2012. The learned Commissioner had erroneously dropped the demand observing that the respondent rendered management, maintenance or repair service not to LDCL but to Union Territory of Lakshadweep Administration (UTLA), which falls under the category of Government and accordingly, eligible to the benefit of Page 2 of 6 ST/20989/2018 Notification No.25/2012-ST dated 20.06.2012. He submits that the said order is not correct as LDCL being a company incorporated under Companies Act and managing the vessels owned by the UTLA, therefore, LDCL cannot themselves call as a Local Authority or Government Authority or Governmental Authority, accordingly, the exemption cannot be held applicable to the services rendered by the respondent to LDCL.
4. Learned Advocate for the respondent has submitted that the respondent is engaged in the activity of ship building and ship repairing. The UTLA decided to avail the services of respondent for the purpose of repairs and maintenance of the vessels owned by it. The vessels of UTLA, accordingly, were managed by LDCL for the purpose of operation of the vessels between Indian mainland and Union Territory of Lakshadweep, therefore, to enable the respondent to carry out the repair activity of the vessels owned by UTLA, a Tripartite Agreement was executed between UTLA, LDCL and Cochin Shipyard Ltd. (respondent). Also, an agreement between UTLA and LDCL was entered on 8.3.2011. The learned advocate placed Certificate of Registration and Certificate of Ownership of the vessels in support of his argument that the vessels belong to UTLA. He submits that the learned Commissioner after verification of the documents placed on record held that the vessels belong to UTLA and therefore, the basis on which the show-cause notice issued was wrong and accordingly, held that the repairing activity undertaken by the respondent on the vessels owned by UTLA is eligible to exemption vide Entry No.21 of Notification No.25/2012-ST dated 20.06.2012, which exempts services rendered to Government by way of repair or maintenance of vessels. He has further submitted that the department, in the present appeal, has not disputed the ownership of the vessel as recorded by the learned Commissioner in the impugned order.
Page 3 of 6ST/20989/2018 Thus, any other challenge in the appeal would travel beyond the scope of show-cause notice, which cannot be entertained at this stage. The Revenue took the grounds of appeal that respondent rendered services to LDCL, a company registered under the Companies Act, hence do not fall within the scope of Notification No.25/2012-ST dated 20.06.2012. The only reason advanced by the department is that the vessel owned by the UTLA are managed by LDCL under the Tripartite Agreement, hence, services are received by LDCL and not by UTLA. He has submitted that the said grounds were never alleged in the show- cause notice, hence, cannot be entertained.
5. Heard both sides and perused the records.
6. The issue involved in the present case is whether the respondents are eligible to the benefit of Entry No.21 of Notification No.25/2012-ST dated 20.06.2012. The learned Commissioner after analysing the relevant agreements under which the respondent maintains the vessel belonging to UTLA and managed by LDCL undertaking services between mainland and the island, the services being rendered to Government, hence, eligible to the benefit of the said Notification.
7. In arriving at the conclusion about the admissibility of said Notification, the learned Commissioner referred to two agreements, (1) Tripartite Agreement among respondent, LDCL and UTLA dated 12.4.2013 and also agreement dated 8.3.2011 between UTLA and LDCL. Further, referring to An Educational Guide published by the Tax Research Unit (TRU), the learned Commissioner recorded that the LDCL is making payment to the respondent on behalf of the UTLA, which is subsequently reimbursed and hence, it is the respondent who provides services to UTLA and UTLA is the recipient of the service. Further, analysing the status of the UTLA whether be considered Page 4 of 6 ST/20989/2018 as a Government, Governmental Authority or Local Authority under the Sl. No.25 of Notification No.25/2012-ST dated 26.06.2012, he has recorded as follows:
"18. Now it is to be pondered and determined whether UTL, to whom the service is rendered by the assessee fits into the category of "Government, Governmental Authority or Local Authority, for enabling the assessee to avail the benefit of Sl. No. 25 of Notification No. 25/2012 ST dated 20.06.2012. The phrase 'Government' has not been defined in the Act. As per Section 3(23) of the General Clauses Act, 1897 'Government includes both Central Government and any State Government. As per Section 3(8) of the said Act Central Government, in relation to anything done or to be done after the commencement of the Constitution, means the President of India. As per Article 53 of the Constitution, the executive power of the Union shall be vested in the President and shall be exercised by him either directly or indirectly through officers subordinate to him in accordance with the Constitution Further, in terms of Article 77 of the Constitution all executive actions of the Government of India shall be expressed to be taken in the name of the President of India Therefore, the Central Government means the President and the officers subordinate to him while exercising the executive powers of the Union vested in the President and in the name of the President. Union territories are under the direct control and administration of Union of India and are administered by the President through an administrator, who is appointed by him with a suitable designation. This designation is called either Lieutenant Governor or Chief Commissioner or Administrator. In Andaman & Nicobar Islands Puducherry and Delhi, administrator is called Lt. Governor, while in Chandigarh, Dadra & Nagar Haveli, Daman & Diu and Lakshadweep he/she is known as Administrator. From this, it is clear that Union Territory of Lakshadweep falls within the ambit of "Government Also, this cements the argument of the assessee that the vessels on which activities are rendered by them are owned by Government/Governmental authorities.
19. In view of the above discussions, it emanates that the service of maintenance or repair of vessels undertaken by the assessee, and Page 5 of 6 ST/20989/2018 rendered to the Union Territory of Lakshadweep Administration, which falls under the category of "Government is eligible for the exemption provided vide Sl. No. 25 of Notification No. 25/2012 ST dated 20.06.2012 Hence the demand made in the Show Cause Notice in this respect fails to sustain and consequently, the assessee is not liable for payment of Service Tax, as demanded in the Notice Further, since the assessee has been proved as not liable for payment of Service Tax demanded in the Notice, there cannot be any suppression of facts resorted to by them with intent to evade payment of Service Tax and hence the allegation on this aspect also fails. Further, in the absence of liability to Service Tax, I hold that the assessee is not liable to be charged with interest or imposed with penalty and the demand in this respect made in the Notice also fails to sustain."
8. During the course of argument, the learned advocate for the respondent placed the certificate indicating the ownership of the vessel vested with UTLA which in turn by agreement entrusted the vessel to UDCL for undertaking ferry services between the Indian mainland and island, a fact not disputed by the Revenue. Therefore, the repair and maintenance service of the vessel is rendered to Government Authority i.e., UTLA. Under these circumstances, we do not find merit in the appeal filed by the Revenue. Consequently, the impugned order is upheld and the appeal being devoid of merit is, accordingly, dismissed.
(Operative portion of the order was pronounced in Open Court on conclusion of hearing.) (D.M. MISRA) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL) rv Page 6 of 6