2013 (11) TMI 1011 - CESTAT NEW DELHI

Supply of tangible goods (STGU) - transfer of possession and effective control of the tankers - import of services - Levy of service tax on reverse charge basis - Section 65(105)(zzzzj) of the Finance Act, 1994 - extended period of limitation - Held that:- the transactions in issue (covered by the two long-term agreements both dated 31.3.01 for charter of the tankers "Disha" and "Raahi" and the short-term charter agreement dated 30.4.09, for charter of the tanker "Trinity Glory") amount to transfer of the right to use tangible goods, with possession and effective control of such goods, in favour of the assessee by owners of the tankers. These transactions fall within the ambit of the exclusionary clause of Section 65(105) (zzzzj) of the Act and are therefore immune to the liability to service tax - Decided in favor of assessee.

Import of service or not - Held that:- Since the tankers were not located during the entire duration of their use by the assessee, within the territory of India, the assessee is not liable to remit tax, under the reverse charge mechanism under Section 66A of the Act, in view of the provisions of the proviso to Rule 3(iii) of the Taxation of Service (provided outside India and received in India) Rules, 2006;

Regarding agreements entered prior to 16.5.2008 - held that:- The transactions covered by long-term charter agreements - for the tankers "Disha" and "Raahi" are outside the purview of the taxable STGU, under Section 65 (105)(zzzzj); since the agreements and the delivery of these tankers pursuant to the agreements (the taxable event), occurred prior to 16.5.08, the date of introduction of this taxable service; and

Penalty u/s 76 to 78 - Held that:- The facts and circumstances justify invocation of the provisions of Section 80, to delete imposition of penalties under Sections 76 to 78 of the Act. Consequently, the imposition of penalties is invalid.

The amounts remitted by the appellant towards service tax and interest, under protest, shall be refunded forthwith - Decided in favor of assessee.