The Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the service of charting of ships and tugs does not fall under the category of steamer agent service and service tax demand without considering documents is not valid.
The revenue alleged that Modest Infrastructure Limited, the appellants have shown income under the head “Income Charter Hire”. As per the Income Tax return filed by the appellant, the department viewed that the appellant have not paid service tax on the amount recovered from the charter/ hire of ships, tugs and others.
A demand of Rs. 47,46,297/- has been demanded under the head Steamer Agent service. The Department is of the view that the appellant has misdeclared the value of management, maintenance and repair service and thereby evaded service tax of Rs. 10,09,717/-. Accordingly, a show cause notice dated 05.10.2020 was issued which has been adjudicated by order-in-original dated 15.04.2013 and the charges involved in the show cause notice have been confirmed.
The appellant contended that the show cause notice has been issued without jurisdiction as the Mumbai office of the appellant is separately registered with the Mumbai office of Service Tax authorities. The Mumbai office of the Company has been regularly filing service tax returns for the activities undertaken by the Mumbai office and since the show cause notice covers all the transactions of the Mumbai office and invoices issued at the Mumbai office in the impugned show cause notice, the impugned order-in-original ab-initio without legal jurisdiction and therefore, needs to be set aside.
Further argued that the service of charting ships and tugs does not fall under the category of Steamer Agent service. The demand under Management, Maintenance and Repair service has also been contested by them showing that the value of taxable service has been correctly declared by them as part of the value and the same has also been included in the previous year’s turnover as the invoice has been raised in that Financial Year though the income is realized later-on.
It was evident that the Adjudicating Authority has not dealt with the issue of jurisdiction about the services provided by the appellant’s Mumbai office for ships and tugs. Prima-facie the documents which have been produced before us indicate that the Mumbai office is separately registered and invoices for the charting of ships and tugs have been issued by them. A two-member bench comprising Ramesh Nair, member (judicial) and C L Mahar, Member (Technical) remanded the matte back for fresh adjudication with the direction that all the documents submitted by the appellant need to be considered and a fresh order needs to be passed
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