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2013 (3) TMI 735 - CESTAT MUMBAIShort payment of service tax - manpower recruitment or supply agency service - appellant failed to discharge service tax on reimbursement of wages received by them (by way of debit notes) from their client M/s. Tidewater during the period November 05 to December 08. Held that: - the OWNER shall furnish CONTRACTOR from time to time with a scale of wages applicable to the SEAFARER. The owner reserves the right to revise such scale at any time on a prospective basis. OWNER shall reimburse the CONTRACTOR, the applicable wages of each SEAFARER incurred as an expense to the CONTRACTOR - the respondent’s contentions that the Seafarers are employees of M/s. TIPL and the service rendered by them is “manpower recruitment” and not “manpower supply” have no basis whatsoever. Whether the service rendered by the respondent is taxable under “manpower recruitment or supply agency” service or “ship management service”? - Held that: - sub-clause (68) relating to manpower recruitment or supply agency service occurs first compared to sub-clause (96a) relating to ship management service. Therefore, the classification sought in the present case by the Revenue under “manpower recruitment or supply agency” service cannot be faulted at all. Whether the respondent was acting as a Pure Agent of M/s. TIPL? - Held that: - When one reads the Agreement entered into by the respondent with M/s. TIPL, it is seen that none of the four elements described above are present. The agreement is not one between an agent and a principal; it is one between two principals. Secondly, the respondent is engaging the seafarers, responsible for their conduct, payment of wages/salaries/other compensations, for their termination and repatriation. For such services rendered, the respondent is getting compensated in two ways, one by way of re-imbursement of the wages/salaries of the seafarers and second by way of daily compensation based on the number/type of seafarers supplied. Thus the question of treating the respondent as a ‘pure agent’ of M/s. TIPL does not arise at all from the terms and conditions of the agreement. Whether both the amounts received, that is, reimbursement of wages and daily compensation are leviable to Service Tax? - Held that: - The Respondent charges for the services rendered by way of two debit notes, one debit note for the daily compensation and the other for the wages of the seafarers. Merely because he has split up the gross amount charged into two elements, it does not mean that only one of them is the gross amount charged and the other is not. The modus operandi adopted in splitting up the gross amount appears to be only for the purpose of avoiding/evading service tax and nothing else. Therefore, the total/gross amount charged for the service rendered is the sum total of both the debit notes, as per the provisions of Section 67 - In the present case, we have determined the value in terms of the provisions of Section 67 of the Finance Act, 1994 and not under Rule 5(1) of the Valuation Rules. Therefore, we do not find any conflict between the issue considered herein. Whether any part of the demand is time-barred and whether there has been any suppression of facts on the part of the respondent? - Held that: - 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. Whether the penalty is imposable on the appellant? - Held that: - Penalty under Section 78 is imposable only when any of the following 5 elements are present, namely, fraud, collusion, willful mis-statement, suppression of facts or contravention of the provisions of the Act or rules made thereunder, with intent to evade payment of service tax - these elements are not present in the instant case. In view of the same, penalty is not imposable under Section 78 of the Finance Act, 1994. Penalty u/s 76 - Held that: - No mens rea is required for imposition of penalty under Section 76 and mere failure to pay Service Tax along with interest will attract the provisions - the appellant has not produced any evidence before us for waiver of penalty under Section 76 - penalty u/s 76 upheld. Appeal allowed in part.
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