Port concession charges not taxable as business support services where payment was for development rights, not infrastructural support.

Royalty, concession fee or lease charges received under a port development BOT arrangement were analysed for taxability as support services of business or commerce under the Finance Act, 1994. The statutory concept of infrastructural support services covers facilities such as office utilities, reception, secretarial support, internet, telecom, pantry and security; the concession here did not involve any such service being rendered by the Port Department to the concessionaire. The payment was only consideration for rights granted under the development arrangement, not for taxable support services. The classification in the impugned order was therefore unsustainable, and the demand failed on merits in favour of the assessee.

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Issues: Whether the royalty, concession fee, or lease charges received under the port development concession could be classified as consideration for taxable support services of business or commerce under the Finance Act, 1994.

Analysis: The concession agreement granted the developer rights to develop, operate, and maintain the port facilities on a BOT basis. For taxability under section 65(105)(zzzq), the service must be one rendered by the Port Department in relation to support services of business or commerce. The statutory meaning of infrastructural support services under section 65(104C) contemplates services such as office utilities, reception, secretarial support, internet, telecom, pantry, and security. The arrangement here did not involve any such support service being provided by the Port Department to the concessionaire. The concession fee was only a payment for the rights granted under the development arrangement and not consideration for any taxable support service. The classification adopted in the impugned order was therefore unsustainable.

Conclusion: The demand was not sustainable on merits and the issue was decided in favour of the assessee.

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