2019 (3) TMI 1755 - AT - Service Tax

Tribunal Rejects Revenue's Service Tax Appeal, Emphasizes Lack of Justification

The Tribunal rejected the Revenue's appeal, emphasizing the lack of justification for demanding Service Tax under the extended period due to the genuine ... Levy of Service Tax - Port services - activity of stevedoring provided by the respondent - Department was of the view that the activity carried out by the Respondent will be liable to payment of Service Tax under port services - HELD THAT:- The issue stands decided by the Larger Bench of the Tribunal in the case of WESTERN AGENCIES PVT. LTD. VERSUS CCE [2011 (3) TMI 528 - CESTAT, CHENNAI (LB)]. The Larger Bench held that the activity will be covered within the ‘Port Service’. However, it has been pointed out before us that the controversy is far from finally settled. The Larger Bench’s decision stands stayed by the Hon’ble Madras High Court and several appeals on this issue are before the Hon’ble Supreme Court. Time limitation - HELD THAT:- The show cause notice has been issued on 13/10/2006 for the period 16/07/2001 to 31/03/2002. The extended period of limitation under Section 73 of Finance Act, 1994 has been cited by Revenue for making such demand. From the show cause notice, is seen that the respondent did not apply for registration soon after the introduction of the service; however, they applied for registration and commenced payment of service tax after the same was pointed out by Revenue during the enquiries - the respondent will be entitled to the bonafide belief, during the disputed period, that the activity carried out by them may not be covered within the definition of Port Service. Consequently, the Revenue will not be justified in pressing the demand under the extended period of limitation. Since no demand survives within the normal period of limitation, there are no justification to interfere with the impugned order - appeal dismissed - decided against Revenue. Issues involved:Interpretation of the term 'Port Service' for Service Tax liability, applicability of the decision of the Larger Bench of the Tribunal, consideration of time bar benefit for the appellant, relevance of pending cases before the Supreme Court.Analysis:1. Interpretation of 'Port Service': The dispute revolved around whether the stevedoring activity conducted by the respondent fell under the category of 'Port Service' for Service Tax liability. The definition of 'Port Service' under Section 65(82) of the Finance Act, 1994 was crucial. The Larger Bench of the Tribunal in the case of Western Agencies Pvt. Ltd. had held that stevedoring services were covered under 'Port Service'. However, the decision was stayed by the Madras High Court, indicating the unsettled nature of the issue.2. Applicability of Tribunal Decision: The appellant argued that based on the decision of the Larger Bench, the issue was settled in favor of Revenue, justifying the demand for Service Tax. On the other hand, the respondent highlighted the stay on the decision by the Madras High Court, emphasizing the ongoing uncertainty and pending appeals before the Supreme Court on the same issue.3. Consideration of Time Bar Benefit: The respondent sought the benefit of time bar, asserting that the ambiguity surrounding whether stevedoring services constituted 'Port Service' led to a genuine belief that they might not be liable for Service Tax during the disputed period. The Tribunal acknowledged the doubtfulness of the issue, especially as it required a reference to the Larger Bench, indicating a lack of clarity.4. Relevance of Pending Cases: The Ld. Advocate pointed out the numerous pending cases before the Supreme Court concerning the same issue, underscoring the broader legal implications and the need for a definitive resolution at a higher judicial level. This highlighted the complex legal landscape surrounding the interpretation of 'Port Service' and the applicability of Service Tax to stevedoring activities.In conclusion, the Tribunal rejected the appeal filed by the Revenue, emphasizing the lack of justification for pressing the demand under the extended period of limitation due to the genuine belief held by the respondent regarding the ambiguity of whether stevedoring services fell under 'Port Service'. The decision underscored the unsettled nature of the legal issue, as evidenced by the stay on the Larger Bench decision and the pending cases before the Supreme Court, necessitating a nuanced approach to the interpretation of 'Port Service' for Service Tax liability.