Port service tax applies only when an authorised port service is actually rendered; captive jetty charges were not taxable.

Port service under the Finance Act, 1994 is taxable only where the port, or a person authorised by it, actually renders a service in relation to a vessel or goods. On the captive jetty agreement, wharfage collected as a concessional statutory rebate against construction cost was not consideration for any service rendered by the Board, so no service tax arose. The licensee was also not authorised to recover wharfage from others, as the Board continued to collect the charges, meaning the statutory requirement of authorisation was absent. Lease rent for waterfront use and direct berthing facilities was likewise a charge for use of property, not port service, so service tax, interest and penalty could not be sustained.

---

---

Issues: (i) Whether wharfage charges and rebate collected under the captive jetty agreement constituted consideration for "port services" under the Finance Act, 1994; (ii) Whether the licensee was a person authorised by the port to render taxable port services; (iii) Whether lease rent charged for waterfront use for direct berthing facilities was taxable as port service.

Issue (i): Whether wharfage charges and rebate collected under the captive jetty agreement constituted consideration for "port services" under the Finance Act, 1994.

Analysis: "Port service" under Section 65(82) of the Finance Act, 1994 requires a service rendered by a port or by a person authorised by the port in relation to a vessel or goods, and the taxable entry in Section 65(105)(zn) is attracted only when such service exists. On the terms of the agreement, the licensee was required to construct, maintain and keep the jetty in serviceable condition at its own cost, while the Board merely granted permission under the Gujarat Maritime Board Act, 1981 and charged wharfage at a concessional rate as a statutory rebate against construction cost. The wharfage collected was therefore not paid for any service rendered by the Board.

Conclusion: The wharfage charges did not constitute taxable port service and no service tax was payable on that account.

Issue (ii): Whether the licensee was a person authorised by the port to render taxable port services.

Analysis: Section 32(3) of the Gujarat Maritime Board Act, 1981 permits authorisation of a person to perform specified services, and Section 32(4) contemplates that such authorised person may then charge or recover sums for those services. The agreement did not authorise the licensee to recover wharfage from others; instead, the Board itself continued to collect the charges. The arrangement therefore lacked the statutory feature of authorisation to perform and charge for port services.

Conclusion: The licensee was not a person authorised by the port to render taxable port services.

Issue (iii): Whether lease rent charged for waterfront use for direct berthing facilities was taxable as port service.

Analysis: The lease rent for waterfront use was a charge for use of the waterfront and direct berthing facility, not consideration for any service rendered in relation to vessels or goods. It did not answer the statutory description of port service under Section 65(82) or Section 65(105)(zn) of the Finance Act, 1994.

Conclusion: The lease rent was not taxable as port service.

Final Conclusion: The demands of service tax, interest and penalty could not be sustained because the essential statutory requirement of a service rendered by the port or by an authorised person in relation to vessels or goods was absent on the facts.

Ratio Decidendi: Service tax under the port services entry is leviable only where the port or its authorised person actually renders a service in relation to a vessel or goods; a charge collected under a captive jetty licence arrangement without such service is not taxable merely because it is described as wharfage or is linked to port use.

---