2019 (1) TMI 1167 - AT - Service Tax

Classification of services - port services or Renting of Immovable Property service? - compensation received by the respondent from ONGC - In consideration for allowing ONGC to lay sub-marine pipelines through the Port Trust limits, the respondent was paid compensation - scope of SCN - Held that - The show cause notice was issued to the respondent, seeking for confirmation of the service tax demand under Port Services. For the first time, Revenue through this present appeal has raised a new ground regarding classification of service under the taxable entry of Renting of Immovable Property Service. Since classification under such service was never the subject matter of dispute before the lower authority and no specific show cause notice was issued to the respondent, alleging classification under such service, the Revenue is not permitted to take such new stand for deciding the appeal in its favour. Appeal dismissed - decided against Revenue.

Summary

Issues:
Classification of services under Port Services or Renting of Immovable Property Service.

Analysis:
The case involves an appeal by Revenue against an order passed by the Principal Commissioner of Service Tax-I, Mumbai, regarding the classification of services provided by the respondent. The respondent, registered for providing taxable services under "Port Services," entered into an agreement with M/s. ONGC for laying pipelines within the Port Trust limits. The Service Tax Department contended that the compensation received by the respondent from ONGC should be taxable under Port Services. However, the adjudicating authority dropped the show cause proceedings, stating that the services provided did not fall under the definition of Port Services. Revenue challenged this decision, arguing that the services should be classified under "Renting of Immovable Property" service.

Upon hearing both sides, the Tribunal noted that the show cause notice was issued under Port Services, and the adjudicating authority had ruled that the services did not align with this category, hence dropping the proceedings. The Revenue raised the issue of classifying the services under Renting of Immovable Property Service for the first time in the appeal. The Tribunal emphasized that since the respondent was not previously notified about this change in classification, the Revenue could not introduce a new ground at this stage. Therefore, the Tribunal concluded that the Revenue's appeal lacked merit and dismissed it.

In summary, the Tribunal upheld the decision of the adjudicating authority, emphasizing that the Revenue's attempt to change the classification of services at the appeal stage without prior notice to the respondent was not permissible under the law. As a result, the appeal filed by Revenue was dismissed, and the original order dropping the show cause proceedings stood.

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