Abbatross Marine Services vs Commissioner Of Service Tax, Mumbai

(Arising out of Order-in-Original No. 05/STC/BR/10-11 dated 06-05-2010 passed by Commissioner of Service tax, Mumbai)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) and Honble Mr. C.J. Mathew, Member (Technical)

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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 : No 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?

====================================================== Abbatross Marine Services Appellant Vs. Commissioner of Service Tax, Mumbai Respondent

Appearance: Shri J.S. Sanghvi, Consultant for Appellant Shri Devendra Nagvenkar Additional Commissioner (AR), for Respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

Date of Hearing : 02/09/2015 Date of Decision : 02/09/2015

ORDER NO

Per: M.V. Ravindran

This appeal is directed against Order-in-Original No. 05/STC/BR/10-11 dated 06-05-2010.

2. The relevant facts that arises for consideration are the appellants are engaged in supplying Manpower to various shipping companies such as Shipping Corporation of India and are in receipt an amount as consideration towards wages/supply of manpower so supplied in the addition to the service charges for the services rendered during the period of July 2005 to March 2007. After the investigation and statements of the appellants, a show cause notice was issued for demand of service tax under the category of Manpower Recruitment and Supply Agency Services by invoking by extended period of limitation alleging that appellant had mis-declared the value of services to the authorities. Appellant contested the show cause notice on merits as well as on limitation. The adjudicating authority after following due process of law did not agree with the contentions raised by the appellant, confirmed the demand of service tax with interest thereof under the category of Manpower Recruitment and Supply Agency Services and also imposed penalties under section 76, 77 and 78 of the Finance Act 1994.

3. Learned consultant appearing on behalf of the appellant submits that services rendered by the appellant will not fall under Manpower Recruitment Services and is correctly classifiable under Ship Management Services which came to be taxed from 1.5.2006. It is his submission that the appellant had discharged the appropriate service tax liability of the amount received as service charge from Shipping Corporation of India Ltd. It is his submission that the Revenue wants to the tax the amount received and passed on by the appellant as salary and wages of the personnel and hence was acting as a pure agent. It is his submission that the entire show cause notice is hit by limitation as during the period from 15.3.2004 towards they were in correspondence with the department on the issue and show cause notice is issued on 31.1.2008. He would draw our attention to paragraph no. 10 of the show cause notice and submit that it alleges that appellant had not declared the value of the salaries, wages and allowances on the demand. He would submit that the appellant has received the amount of salaries, wages and allowances as per the provisions of National Ship Seafarers Union and paid the same to the manpower as required under the provisions of said rules. He submits that the judgment set aside on limitation as they were under bona-fide belief that tax is to be paid only on service charges.

4. Learned departmental representative on the other hand would submit that on merits the issue is now squarely covered in favor of the Revenue in the case of M/s Safe & Sure Marine Services Pvt. Ltd.-2013-TIOL-1741-CESTAT-Mum. It is his submission that on merits appellants has no case; as regards the limitation, it is his submission that the appellant has not declared correct gross value received by appellant from Shipping Corporation of India. He would draw our attention to the findings recorded by the adjudicating authority. He would submit that appellant had not given any regarding the emoluments of the personnel supplied by them. He would rely upon the judgment of the Tribunal in the case of Safe & Sure Marine Services P. Ltd. where in extended period invoked is also held in favor of the Revenue.

5. We have considered the submission made by the both sides and perused the records.

6. The issue involved in this case is regarding the liability to discharge service tax under the category of recruitment of manpower and supply services.

7. Undisputed facts are appellant are supplying manpower to various shipping companies as per the terms of the National Marine Board (India) by an agreement with the National Union Shipping Workers of India. It is also undisputed that the wages, salaries and allowances to all the personal supplied to various shipping corporation have to be paid as per the minimum wages prescribed by National Marine Board of (India) wage agreements in respect of all the staff who are working on various ships. It is also undisputed that the appellant is discharging the services tax liability on the amount received as service charges from the Shipping Corporation of India and that he remits the salary and wages of individuals as received from Shipping Corporation of India, to individuals.

8. On merits, we find that the learned departmental representative was correct in stating that the issue is now settled against the appellant assessee in as much with the services of supply various personnel to shipping companies are taxable under Manpower Recruitment and Supply Agency Services, during the material period. On merits, we reject the appeal filed by the appellant.

9. As regards the issue of limitation we do find various correspondence were exchanged between the appellant and authorities bellow. One of the letter is dated 30 June, 2004 wherein the Superintendent of Central Excise and Service Tax, has asked the assure to the furnish copies of various documents for the year 2002-03 including contract/agreement, copies of balance sheet and office copies of invoices and detailed write up regarding the activities/nature of work carried out by the appellant; in response appellant gave all the files by letter dated 15/03/2004. We also find that the subsequently, nothing happened and after a gap of four years show cause notice was issued by the office of DUCEI on 31.01.2008 alleging that the appellant had suppressed the gross value collected by them from Shipping Corporation of India.

10. We are of the view that in the case in hand, extended period of limitation cannot be invoked, as from various correspondence with the appellant, details from for the period 2002-03, were called for by the authorities and no show cause notice issued. We also find that the appellant has been informing the departmental authorities that the amount which has been received by them from Shipping Corporation of India was actually the wages, salaries and allowances payable to the various staff supplied by them, which they have done so and have received only an amount as service charges, on which undisputedly service tax liability stands discharged. In our view, appellant could have entertained a bona-fide belief that they are acting as a pure agent while transmitting the amount of salaries, wages and allowances Shipping Corporation of India to the staff supplied by them. We find that this bench in the case of Jubilant Enpro Pvt. Ltd. had an occasion to consider an identical issue and vide final order no. A/419-420/13/CSTB/C-I dated 08 March 2013, while holding against on the appellant on merits, on limitation held in favor of the appellant therein. The findings in paragraph no. 5.10 are reproduced.

5.10 The next issue for consideration is whether any part of the demand is time-barred and whether there has been any suppression of facts on the part of the Respondent. The Respondent's claim is that they have indicated in the 5T3 Returns, the amounts received towards seafarer's wages as "Amount received as pure agent" under column F(l)(c)(iii) and copies of the same has been annexed to the cross objection papers. From these returns for the period October 06 to March 09, it is seen that the Respondent has claimed that certain amounts received under the category of 'pure agents' is exempt from service tax. Though the appellant has not stated in the said returns that these receipts are towards reimbursement of wages, no mis-declaration with an intent to evade payment of service tax can be alleged against the appellant. If there was any intent to evade service tax, they need not have shown the amounts received under the category of pure agents. Therefore, the extended period of time cannot be invoked to confirm the service tax demand. In view of the above factual position apparent from the records, we hold that the demand for service tax is sustainable only for the normal period of time under section 73 of the Finance Act, 1994. Once the demand for service tax is upheld, interest liability is automatic and consequential under the provisions of section 75 of the said Finance Act. In the present case the show-cause notice has been issued on 20th May 2009. The normal period of limitation is one year from the relevant date. As per explanation to Section 73, the relevant date is the date of filing of return. In the present case the return for the period October 2007 to March 2008 has been filed as on 25/07/2008. Therefore, the service tax demand for the period October 2007 to December 2008 shall be within the normal period and we hold accordingly.

11. The above ratio of this benchs order dated 08/03/2013 is squarely applicable, for the non-invocation of extended period in the case in hand.

12. Accordingly, we hold that the Show cause notice dated 31/01/2008 demanding the service tax liability for the period July 2005 to March 2007 is hit by limitation except for the period which is within limitation.

13. The appeal is disposed of as indicated herein above.

(Pronounced in Court)

(C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial)

akp 1 5 APPEAL No.ST/385/10-Mum