Service Tax
TRT-2025-
Date:-10-08-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 10 August 2023
Parties: M/s ASP Ship Management (India) Pvt. Ltd. Vs Commissioner of Service Tax, Mumbai-V
Facts –
- The Appellant, M/s ASP Ship Management (India) Pvt. Ltd. Are engaged in rendering “ship management services”
- On the basis of investigation conducted by anti-evasion wing of Service Tax-I Commissionerate, Mumbai, it was concluded that various reimbursable expenses received as ship management service during October 2006 to March 2011, on which service tax is liable to be paid has not been paid by the appellants.
- Accordingly show cause proceedings were initiated by issue of three show cause notices dated 20.04.2012, 16.10.2012 and 16.09.2014
Issue –
- Whether the amounts recovered by the appellants through debit notes are to be treated as part of taxable value for the purpose of levy of service tax or not?
Order –
- The Tribunal observed that in rendering ship management services, the appellants have incurred various expenditures for and on behalf of the ship owners and claimed reimbursement for the same. In terms of the above specific clauses of the agreement, the appellants have carried out their responsibilities as agents, for and on behalf of the owners.
- Accordingly, all monies received by the appellants was credited in a separate bank account and the interest accrued on the same was also credited to the owners. Commission and discount obtained by the appellants was also credited to the owner’s bank account.
- The taxable services are listed in Section 65(105). The service provided by the petitioner falls under clause (zzzt). It is only the value of such service that is to say, the value of the service rendered by the appellants to ship owner, which is that of a ship management service, that can be brought to charge and nothing more. Thus, the quantification of the value of the service can therefore never exceed the gross amount charged by the service provider for the ship management service provided by them.
- Hon’ble High Court of Delhi in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. Vs. Union of India in W.P. (C) 6370/2008 reported in 2013(29) S.T.R. 9 (Del.) hold that Rule 5 (1) of the Rules runs counter and is repugnant to Sections 66 and 67 of the Act and to that extent it is ultra vires, thus by including the expenditure and costs, Rule 5(1) goes far beyond the charging provisions and cannot be upheld.
- Hence the impugned order cannot be sustained. The appeal is allowed.
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