Port service tax cannot cover unauthorised barging activity, and later water-transport entry applies only prospectively.

Barging or lighterage charges for moving goods between shore and a mother vessel were held not taxable as port services for the relevant period because the activity was not shown to be performed by the port or by a person validly authorised by the port. The later entry taxing transport of goods by coastal, national waterway or inland waterway was treated as a separate prospective levy and could not be used to retrospectively bring the same activity within the earlier port service entry. As the dispute involved interpretation of taxing provisions and the activity had been disclosed, extended limitation and penalty were held not invocable.

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Issues: (i) whether barging or lighterage charges for transportation of goods between the shore and the mother vessel were taxable as port services; (ii) whether the introduction of the later entry for transport of goods by coastal, national waterway or inland waterway displaced taxation under the earlier port service entry for the disputed period; and (iii) whether extended limitation and penalty were invocable.

Issue (i): whether barging or lighterage charges for transportation of goods between the shore and the mother vessel were taxable as port services.

Analysis: The pre-amendment definition of port service covered services rendered by a port or by a person authorised by such port in relation to a vessel or goods. The appellant was not shown to have been authorised by the port to perform the disputed activity, and the lease and permissions were treated as enabling entry and use of port land, not as statutory authorisation to perform port services. The reasoning also noted that the relevant port-service wording prior to 1-7-2010 did not extend to every service rendered within port premises.

Conclusion: The disputed barging or lighterage activity was not taxable as port service for the relevant period.

Issue (ii): whether the introduction of the later entry for transport of goods by coastal, national waterway or inland waterway displaced taxation under the earlier port service entry for the disputed period.

Analysis: The later taxable entry was treated as a separate and prospective levy. The reasoning applied the principle that when a new taxable entry is introduced, the same activity cannot be forced into an existing entry unless the new entry is carved out of the old one. Since the disputed transportation by water fell within the later entry only from the date of its introduction, it could not be retrospectively brought within port service.

Conclusion: The activity became taxable, if at all, only under the later water-transport entry and not under port service for the disputed period.

Issue (iii): whether extended limitation and penalty were invocable.

Analysis: The dispute was treated as one of interpretation of taxing provisions. The appellant had disclosed the activity to the department and the records did not support suppression of facts or wilful misstatement with intent to evade tax. On that basis, the ingredients for invoking the extended period were held absent, and the penal consequences were not sustainable.

Conclusion: Extended limitation and penalty were not invocable.

Final Conclusion: The demand could not be sustained under port service for the relevant period, and the impugned order was set aside with consequential relief.

Ratio Decidendi: A service is taxable as port service only when it is rendered by the port or by a person validly authorised by the port, and a later prospective taxable entry for a distinct activity cannot be used to enlarge an earlier entry for a prior period.

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