Transportation services between port and sea area denied service tax exemption under Sr. No. 18 of Notification 12/2017-Central Tax Rate

AAR Gujarat ruled that transportation services between Magdalla Port and General Lighterage Area in Arabian Sea do not qualify for service tax exemption under Sr. No. 18 of Notification No. 12/2017-Central Tax (Rate). The waterway is part of Arabian Sea, not inland waterways as defined under Inland Vessel Act, 1917 or national waterways under Inland Water Ways Authority of India Act, 1985. Since Arabian Sea is not within Gujarat State territory and not covered under "other waterway on any inland water" definition, the exemption for inland waterway transportation services is denied.

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Issues:
1. Whether the service of transportation of goods from Magdalla Port to its General Lighterage Area is exempt under Notification No. 12/2017-Central Tax (Rate)Rs.
2. Whether the above transportation service falls within the definition of 'Inland waterways'Rs.

Analysis:
1. The applicant claimed exemption under Entry No. 18 of Notification No. 12/2017-Central Tax (Rate) for transporting goods by inland waterways. The definition of 'inland waterways' includes national waterways and other waterways on inland water. The National Waterways Act, 2016 declares certain waterways as national waterways. The General Lighterage Area of Magdalla Port does not fall within the declared National Waterway 100-Tapi River, indicating the service does not qualify as an inland waterway service.

2. The definition of 'Other waterway on any inland water' under the Inland Vessel Act, 1917 includes canals, rivers, lakes, or navigable waters within a state. The transportation route provided by the applicant is part of the Arabian Sea, not within a state's canal, river, or lake. Thus, the service does not meet the criteria for 'Other waterway on any inland water'. The transportation activity in question is not eligible for exemption under the definition of inland waterways.

Conclusion:
The Authority ruled that the transportation service from Magdalla Port to its General Lighterage Area does not qualify for exemption under Notification No. 12/2017-Central Tax (Rate) as it does not meet the criteria for 'inland waterways'. The service route being part of the Arabian Sea does not fall under the definition of 'Other waterway on any inland water'. Therefore, the service of transporting goods in this scenario does not satisfy the conditions for exemption as per the relevant notifications.

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