The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand as repair service was done outside India and observed that levy of service tax on maintenance and repair services is on basis of the place of performance.
M/s. International Seaport Dredging Private Ltd., are engaged in providing Dredging Service. They are registered with the service tax Commissionerate and subsequently obtained centralized registration. During the course of audit, it was noted by the Department that appellant had not paid Service Tax on Dredging Services provided to Dredging Corporation of India (DCI) for Sethu Samudram Project and Dhamra Port Company Ltd., and also on certain services imported by them.
The very same issue had come up for consideration in regard to the maintenance and repair services of the vessel Pacifique. The matter was remanded to the adjudicating authority and in such denovo adjudication, the original authority held that the demand cannot sustain and dropped the same.
The contention raised by the appellant was that the maintenance and repair services were performed on the vessel outside India and amount paid for such repair services to the Foreign Service provider cannot be subject to levy of Service Tax under reverse charge mechanism alleging import of services.
The repair and maintenance services are performance-based services; as the services have been performed outside India, the provisions regarding import of services cannot be applied to demand Service Tax from the appellant. After perusal of the documents, the original authority analysed this issue in the remand proceedings as under to drop the demand.
The counsel submitted that the original authority has referred the name of the vessel as Pacifique. In fact, in these appeals, the repairs were with regard to Vessel Orwell and repairs were done at South Africa. Order-in-Original has erroneously mentioned the vessel name as Pacifique.
A Two-Member Bench comprising CS Sulekha Beevi, Judicial Member and Vasa Seshagiri Rao, Technical Member observed that “It is very much clear that the repair services were done outside India. The levy of Service Tax on Maintenance and Repair Services is on the basis of the place of performance and therefore the demand cannot be sustained as the services have been performed outside India and not received in India. For this reason, we hold that the demand under this category cannot sustain and requires to be set aside which we hereby do.”
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