Port storage as part of port service, not separate warehousing, avoids distinct tax treatment

Storage of goods by a minor port within port was treated as part of port service, not as a separate storage and warehousing service. The statutory scheme distinguished port operations from warehousing, and section 42 of the Major Port Trusts Act, 1963 recognised storing goods as a port function. The Board's 1 August 2002 clarification also treated storage and warehousing facilities in port premises as covered by port service. Because the activity was incidental and ancillary to port operations and was not offered as a standalone warehouse service to the public, it could not be split for separate taxation. The later levy on minor port services from 1 July 2003 reinforced that earlier separate taxation was not intended.

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Issues: Whether storage of goods by a minor port in its port was classifiable and taxable during the relevant period as storage and warehousing service, or whether it formed an integral part of port service and could not be separately taxed.

Analysis: The majority held that the statutory scheme drew a distinction between port service and storage and warehousing service. Section 42 of the Major Port Trusts Act, 1963 treated storing goods within the port premises as one of the functions performed in relation to port operations, and the Board's clarification of 1 August 2002 stated that storage and warehousing facilities provided in port premises were covered under port service. The storage activity was found to be incidental and ancillary to the appellant's port operations, meant only for importers and exporters using the port, and not a standalone activity offered by a storage or warehouse keeper to the public at large. The activity could not be artificially split or vivisected from the composite port service for separate taxation under storage and warehousing. The subsequent levy of tax on minor port services from 1 July 2003 supported the view that the same activity was not separately taxable under the earlier category.

Conclusion: The storage activity was not separately taxable as storage and warehousing service and was to be treated as part of port service; the demand and penalties could not be sustained on merits.

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