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TMI Blog2013 (2) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of Immovable Property services. 1.1 During the course of an Audit conducted by the officers of Internal Audit Group of the Chennai Service Tax Commissionerate, it was ascertained that Crescent on an agreement with Eagle Ship Management Private Limited, an overseas Company to provide facilities like Office space, telephone, secretarial assistance and other facilities at the office premises of Crescent located at Transworld House, III Floor, No. 2, 9th Lane, Dr. Radhakrishnan Salai, Mylapore, Chennai - 600 004. As per the agreement effective from 1-9-2006 to 31-8-2009, Crescent was appointed as an agent to the principal, M/s. Red Eagle Ship Management Pvt. Ltd., a company incorporated in Singapore. 1.2 As per the agreement, it appeared that the services rendered by the appellant includes every service provided in relation to the business activity of its Principal, M/s. Eagle Ship Management Private Ltd., which falls under the category of Business Support Service, is a taxable service as per Section 65(105)(zzzq) of the Finance Act, 1994. During the period from September 2006 to December 2007, the appellant had received a taxable income of Rs. 1,03,06,897/- from its pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under 'ship management service' under Section 65(96a), the classification under 'Manpower Recruitment or supply service is not correct; (v) that Rule 31 of Special Economic Zone Rules, 2006 which provides exemption from payment of service tax on all the taxable services specified under Section 65 of the Finance Act, 1994 rendered to a developer or a unit by any service provider for the authorized operation in SEZ. Thus all services provided to the unit or developer situated in the SEZ are consumed for or in relation to the authorized operation in the SEZ and are eligible for exemption of this Notification; (vi) that the period involved for the first issue is from 1-9-2006 to 31-12-2007, whereas the notice was issued on 2-7-2008 and therefore the part of the demand is time-barred as the issue involved is classification dispute and they bonafidely believed that no Service tax is payable on account of export of service. 4. Personal Hearing was held on 8-6-2011. Ms. Uma Maheswari, Advocate, appeared before me on behalf of the appellant. None has appeared from the department side, despite intimation. 4.1 The advocate, during the hearing, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be invoked in this case. Thus the demand in the instant case is partly hit by limitation of time and the period w.e.f. 1-4-2007 alone will survive as it is within a period of one year from the relevant date 5.2 I find from the records that the appellant was issued with Show Cause notice for non-registration and non-payment of Service tax on the services rendered by the appellant to ESMPL under "Business Support Services" (BSS in short). The appellant had stated during the personal hearing that their activity would fall under "Ship Management Service". Though, this argument was not raised by the appellant during the adjudication proceedings, I am admitting this new plea since it is a substantial issue and non admitting of the new plea would jeopardize the rights of the appellant. Besides, as rightly pointed out by the appellant, the SCN itself mentions two different classifications at different places. Therefore there is nothing wrong in admitting the new plea of the appellant at the appellate stage. The main arguments of the appellant are : that though the agreement appears to be composite in nature, essentially is an agreement for providing crews for the ships belongin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat category the supply of seafarers would fall. 5.4 There are three situations have been given under Section 65A for classification of service when a taxable service is, prima facie, classifiable under two or more sub-clauses. Section 65A(2)(a) says "the sub-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description. In the instant case there is a specific inclusion of providing of crews under Section 96(96a)(ii) meant for ship management service. Whereas there is no such inclusion in BSS. Therefore the supply or providing of seafarers to ESMPL, a foreign Company, would definitely classifiable under ship management service. Even for the argument sake, the above version is not acceptable, in terms of Section 65A(2)(b) also, the providing of seafarers could be classified under ship management service since the essential service is providing of crew members (seafarers) to the ship owned, managed and controlled by a foreign company i.e ESMPL. Therefore, as rightly contended by the appellant, providing of seafarers (crew members) in terms of written agreement, is classifiable under ship management service only. The L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers in foreign markets. In the instant case the Steamer Agent's service provided by the appellant is ultimately consumed by the SEZ units. Just like Courier, Telecommunication and Manpower recruitment services, this Steamer Agent's service is also provided by service providers from outside SEZ and the provision of service commence from outside the SEZ premises, but ends within the SEZ units and construed to be consumed within SEZ premise. It is also seen that in the instant case the Lower Adjudicating Authority has not disputed the fact of utilization of services of Steamer Agent's Services by the SEZ units. If that be the case, then it clearly amounts to consumption of services within SEZ. 5.8 Further, it is also seen that the SEZ Act has an overriding effect by virtue of Section 51 which provides that Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument have effect by virtue of any law other than this Act. In view of this specific provision, if the appellant is held ineligible for availing Notification No. 4/2004-S.T. considering its wordings i.e. consumption of services within SEZ, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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