International Seaport Dredging Pvt. Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chandigarh)
Bareboat Charter of Dredgers Constitutes Transfer of Right to Use Goods – Not Taxable as “Supply of Tangible Goods” Service: CESTAT Chandigarh
The appellant is a world leader in dredging activity. It took; on hire; dredgers and other equipment from a supplier located outside India. A demand of service tax of over Rs.20 crores along with interest and penalty was confirmed for the period from 2011-12 to 2014-15 on the ground that it was liable to service tax under “supply of tangible goods for use” service; on reverse charge basis. Hence; appeal.
Hon’ble CESTAT, Chennai set aside the order and allowed the appeal. It held: (i) the Tribunal in the appellants own case; on examination of the agreement; held that there was “transfer of right to use goods” and hence; cannot be subjected to service tax; (ii) it was a standard bareboat charter and not a service; relies on judgment of Supreme Court in Shelf Drilling and Great Eastern Shipping; (iii) rejects the argument that post 2012 (negative list); it is a taxable service as there is no supply; (iv) the lis between the parties is settled as revenue has accepted the earlier order; relies on judgment of Supreme Court in Jayswal Neco; (v) accordingly; sets aside demand on merits.
