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2024 (3) TMI 640 - CESTAT HYDERABADClassification of services - Works Contract Services or not - development of shipyard facilities at Kakinada for which they had entered into a Contract - Dredging service’ or not - applicability of provisions under Sec 75, 76, 77 & 78 of FA. Whether the appellants are entitled for the exemption notifications claimed by them for not paying service tax in respect of certain activities undertaken by them pursuant to their contract with M/s Sembmarine? - HELD THAT:- The perusal of the Agreement dt.06.04.2011, as also the amendment dt.24.02.2014, clearly brings out that this is an Agreement for development of shipyard facilities at Kakinada port. It is also not disputed that they were doing certain limited work in terms of the scope of work covered within the agreement, which primarily involved three broad categories viz., land and land development, marine infrastructure development and new building facilities. Essentially, it is part of the work which was undertaken by them towards the development of shipyard facilities at Kakinada Port - The nature of work described in the RA Bills, as also from the terms of agreement, it is obvious that those activities cannot be covered but for construction, repair, alteration or renovation of any of the specified structures viz., wharves, quays, docks, stages, jetties, piers and railways. Thus, on strict construction of Notification No. 11/2011, exemption is not admissible in the facts of the case. There are no force in this line of argument as the notification issued declaring certain areas within a Customs station as Customs area is for the limited purpose as envisaged in the Customs Act and that in itself cannot declare that space as a deemed port or otherwise. A Customs area within a port is a specified area but the entire Customs area cannot become port, if it is not otherwise a port, in terms of definition of port in the Statute. Thus, on this count also, the appellants have no case. Dredging services or not - services rendered were dredging for approach channel, repair berth and floating dry dock - HELD THAT:- It is obvious that as long as these activities were being in relation to construction of shipyard, these activities will also not be entitled to exemption either under Notification No. 25/2007 or under 11/2011. Time limitation - HELD THAT:- The appellants have not been able to bring anything concrete on record to suggest that they were under any bonafide belief regarding non-payment of service tax, whereas, the department has been able to clearly establish that they were collecting service tax but neither paying the same nor reflecting the same in their ST3 Returns, or claiming any specific exemption notification for exemption - The fact that appellants have argued that in terms of agreement dt.06.04.2011, clause 70.4, they were aware about exemption from service tax and cess and yet they collected service tax, further, indicating their determinate disregard to statutory obligations. Thus, on this count also, the extended period of limitation has been rightly invoked. Penalty - HELD THAT:- The Original Authority has not imposed penalty in terms of Sec 76 as penalty has been imposed under Sec 78 of the Act. There are no infirmity in the impugned order passed by the Original Authority and hold that the appellants are not entitled to the benefits of the notifications claimed by them, in the facts of the case and evidence on record - appeal dismissed.
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