Statutory waterfront levy is not port service, and extended limitation fails absent suppression or intent to evade.

Waterfront royalty or wharfage charges collected by the Gujarat Maritime Board under the Gujarat Maritime Board Act, 1981 were treated as a statutory levy, not consideration for any service rendered in relation to vessel or goods. On that basis, the charges were held not taxable as port service under the Finance Act, 1994, and the service tax demand failed on merits. The extended limitation period was also found unavailable because departmental audits and prior scrutiny had already covered the relevant records, so suppression, misstatement, fraud, or intent to evade were not established. The service tax, interest, and penalty demand was set aside and the assessee succeeded.

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Issues: (i) Whether waterfront royalty or wharfage charges collected under the Gujarat Maritime Board Act, 1981 were taxable as port service under the Finance Act, 1994. (ii) Whether the demand was barred by limitation and the extended period could be invoked.

Issue (i): Whether waterfront royalty or wharfage charges collected under the Gujarat Maritime Board Act, 1981 were taxable as port service under the Finance Act, 1994.

Analysis: The definition of port service applicable to the relevant period covered services rendered by a port or an authorised person in relation to vessel or goods. The waterfront royalty was found to be a statutory levy collected for permitting operation of port facilities, and not consideration for any service rendered by the appellant in relation to vessel or goods. The levy was treated as arising from a sovereign or statutory function, and the Board circular on statutory levies under public authority was applied. The earlier decision in the same controversy was also relied upon to hold that such charges do not amount to port service.

Conclusion: The charges were not taxable as port service and the demand on merits failed in favour of the assessee.

Issue (ii): Whether the demand was barred by limitation and the extended period could be invoked.

Analysis: The records showed repeated departmental audits and prior examination of the relevant financial material before issuance of the show cause notice. In that background, the ingredients of suppression, misstatement, fraud, or intent to evade were not established. Since the notice was issued beyond the normal limitation period, invocation of the extended period was unsustainable.

Conclusion: The demand was barred by limitation and the extended period was not invocable.

Final Conclusion: The impugned order confirming service tax, interest, and penalty was set aside and the appeal succeeded.

Ratio Decidendi: A statutory levy collected by a public authority in exercise of sovereign or statutory powers, without any service rendered in relation to vessel or goods, is not chargeable as port service; and the extended period of limitation cannot be invoked absent suppression or intent to evade where the material facts were already within departmental knowledge.

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