Aban Offshore Ltd Vs Commissioner of GST & Central Excise (CESTAT Chennai)
CESTAT Chennai held that DGCEI officers are Central Excise Officers as they have been vested with the powers are fully competent to issue Show Cause Notice demanding service tax on reverse charge.
Facts- The appellant is engaged in providing offshore drilling services to oil They are also registered with the Service Tax Department for providing other taxable services. While providing the offshore drilling service, the appellant engaged the services of various service providers located outside India, to provide engineering consultancy, management consultancy, testing & inspection and banking service.
Based on intelligence, it was alleged that the appellant has neither obtained service tax registration for receiving the subject services nor paid service tax on reverse charge basis in terms of Rule 2(1)(d)(iv) of Service Tax Rules, 1994. Accordingly, demand for service tax with equal penalty u/s. 78 of FA 1994 for the extended period along with penalty u/s. 76 of FA 1994 for the normal period was confirmed. Being aggrieved, the present appeal is filed.
Conclusion- Held that the services provided from outside India by Barclays UK is received by the Appellant in India with a reverse flow of consideration for the said activity and the service is exigible to tax under the Reverse Charge Mechanism as per section 66A(1) of FA 1994.
Held that the Central Government vide Notification No. 3/2004-ST dated 3.2004 have appointed ADG (DGCEI) as a Central Excise Officer for whole of India and have vested in him all the powers that are exercisable by the Central Excise officers and is hence fully competent to issue the present Show Cause Notice under consideration.
FULL TEXT OF THE CESTAT CHENNAI ORDER
These appeals are filed by the appellants against Order in Original No. 117 to 120/2012 dated 28.11.2012 passed by the Commissioner of Service Tax, Chennai. (impugned order)
2. Brief facts of the case are that the appellant is engaged in providing offshore drilling services to oil They are also registered with the Service Tax Department for providing other taxable services. While providing the offshore drilling service, the appellant engaged the services of various service providers located outside India, to provide engineering consultancy, management consultancy, testing & inspection and banking service. On receiving intelligence that the appellant has neither obtained service tax registration for receiving the subject services nor paid service tax on reverse charge basis in terms of Rule 2(1)(d)(iv) of Service Tax Rules, 1994, the Directorate General of Central Excise Intelligence (DGCEI), Chennai Zonal Unit’s investigated the matter culminating in issuance of Show Cause Notice’s for the period from 2003 – 04 to September 2011 as detailed in the annexure to the impugned order, under the relevant provisions of the Finance Act, 1994 (FA, 1994). After due process of law, the adjudicating authority revised and confirmed the demand for service tax of Rs.7,31,87,545/- with equal penalty under section 78 of FA 1994 for the extended period and Rs 55,40,497/- along with penalty under section 76 of FA 1994 for the normal period. A penalty was also imposed for non-filing of ST3 Returns. Aggrieved by the said order, the appellant is now before the Tribunal assailing the findings and the demand confirmed.
3. No cross-objection has been filed by Revenue.
4. We have heard learned Counsel Smt. Radhika Chandrasekar for the appellant and Shri Harendra Singh Pal, learned AC (AR) for Revenue.
4.1 The learned Counsel for the appellant made a preliminary technical objection that Show Cause Notice No.23/2009 has been issued by the Additional Director General (ADG), DGCEI and is hence not maintainable. With respect to demand of duty for Management Consultancy Services she stated that M/s. India Offshore , (IOI) is required to provide technical documentation and know-how for efficient operation of the rigs and service. The Appellant had correctly registered the service under the category of Intellectual Property Services and had discharged service tax. With respect to Consulting Engineering Services, the Appellant has entered into agreement for supply of manpower. Having accepted registration under the category of Manpower Recruitment or Supply Agency Service (MRSAS), the department cannot tax the same under a different head. In terms of Section 65A of Finance Act, 1994 specific description prevails over general description. With respect to Banking and Financial Services she said that the Appellant had entered into an agreement with Barclays Bank PLC to advise and assist the Appellant in acquiring funds through issue of Foreign Currency Convertible Bond (FCCB). The proceeds have been received outside India after deduction of amount due to the foreign consultant. Hence the charge is not tenable. With respect to Technical Inspection and certification services she said that the appellant had rendered service with respect to rigs situated in the non- designated area and therefore there is no liability to pay service tax. With respect to Legal Consultancy Services she stated that the impugned order accepts that the legal fees were paid in connection with legal issues outside India. Having accepted that the entire activity has taken place outside India the confirmation of demand under legal consultancy services is not tenable. Further since the Show Cause Notice No.23/2009 is barred by limitation, extended period is not invocable as there is no suppression, fraud etc. as required under proviso to Section 73. She prayed that the impugned order be set aside
4.2 The learned AC (AR) stated that the Appellant has all along been reluctant to share details of their activities as pointed out in the impugned order, which has discussed all the issues The non-submission and late submission of the information was deliberate and hence the extended period of time has been invoked correctly. He reiterated the points given in the impugned order on behalf of Revenue and prayed that the appeal may be rejected.
4.3 Having gone through the appeal papers and having heard the rival parties, we proceed to examine the dispute relating to the classification of various The issues examined in this order are given in the table below:
