Port services do not cover rental of barges and tugging facilities hired as equipment, not cargo-handling services.

Rental income from hiring out barges, floating cranes and tugging facilities was not treated as consideration for port services under the Finance Act, 1994, because the facilities were let as equipment rather than provided as services connected with cargo or vessel handling. The permission and lease terms showed that the jetty and related infrastructure were primarily for the appellant's own use, while any third-party cargo handling required separate permission and charges to the port authority. The Tribunal also followed its earlier view that a licence to operate such facilities is not equivalent to authorisation to provide port services, and held that the income was not exigible to Service Tax.

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Issues: Whether the rental income received from hiring out barges, floating cranes and tugging facilities was liable to Service Tax as "port services" under the Finance Act, 1994.

Analysis: The facilities were hired out as equipment and not as services rendered in relation to handling of cargo or vessels within the scope of port services. The permission and lease conditions showed that the jetty and infrastructure were primarily for the appellant's use, and any third-party cargo handling would require separate permission and charges payable to the port authority. The Tribunal also relied on its earlier view that a licence to operate such facilities is not the same as an authorization to provide port services, and the same legal issue had already been decided in favour of the assessee.

Conclusion: The rental income from hiring out barges, floating cranes and tugging facilities did not fall within "port services" and was not exigible to Service Tax; the finding against the assessee was unsustainable.

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