2023 (11) TMI 310 - AT - Service Tax

Water front royalty under Maritime Board Act Section 22A is statutory levy, not service taxable

CESTAT Ahmedabad held that water front royalty charged by Gujarat Maritime Board from April 1, 2008 under Maritime Board Act, 1981 Section 22A constitutes ... Levy of Service Tax - water front royalty/ wharfage charges - statutory levy charged by the Government of Gujarat in respect of sovereign/staturory function or not - invocation of extended period of limitation - HELD THAT:- The water front royalty is being charged from 1 April 2008 as per the provisions of the Maritime Board Act, 1981 per Section 22A, and therefore the maritime board is collecting the water front royalty as a statutory levy provided by Maritime Board Act, 1981, on behalf of State of Gujarat. A similar matter has already been decided by this Tribunal in the appellant’s own case of PORT OFFICER, GUJARAT MARITIME BOARD, JAFRABAD VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, BHAVNAGAR [014 (7) TMI 972 - CESTAT AHMEDABAD] where it was held that any amount collected after April 1, 2008 by Gujarat Maritime Board, can be considered as statutory levy only and service tax liability thereon may not arise. Invocation of Extended period of limitation - period of demand in this case pertains to 2006-07 to Feb 2009 and the show cause notice in this case has been issued on 21/10/2011 - Section 73 of the Finance Act, 1994 - HELD THAT:- The fact is noted that a final audit order report No. 10/ST/2008-09, for covering the audit period October 2005 to March 2008, wherein all the financial records have been there report the auditing officers. Similarly another audit final order report No. 75/ST-2009-10 dated 03.05.2010, covering period from 2008 to September 2009 has also been placed on record. The above audited report indicate that all the financial statements of the appellants were before the auditing officers much before the issuing of the SCN. In these circumstances, we feel that element of the suppression of facts or mis- representation etc., within intent to evade Service Tax are not present in this case. As the SCN has been issued on 21 October 2011 much beyond the normal period of demand, the SCN is barred by period of limitation. The impugned order-in-original is without any merit and therefore set aside - appeal allowed. Issues Involved:1. Taxability of Water Front Royalty/Wharfage Charges.2. Definition and Scope of 'Port Services' before and after the amendment on 01.07.2010.3. Invocation of Extended Time Proviso for Demand of Duty.4. Nature of Water Front Royalty as Statutory Levy.5. Suppression or Misrepresentation of Facts for Evading Service Tax.6. Previous Tribunal and Supreme Court Rulings on Similar Matters.Summary:1. Taxability of Water Front Royalty/Wharfage Charges:The appellant argued that water front royalty charged by them is a statutory levy by the Government of Gujarat and should not be considered a taxable service. They relied on CBIC's Circular No. 89/7/2006-ST dated 18.12.2006, which states that statutory levies are not taxable services. The Tribunal agreed, noting that the charges are collected under the Gujarat Maritime Board Act, 1981, and credited to the consolidated fund of the state, thus being a sovereign function.2. Definition and Scope of 'Port Services' before and after the amendment on 01.07.2010:The appellant contended that before the amendment on 01.07.2010, 'port service' was defined as any service rendered by a port or any person authorized by the port, in relation to a vessel or goods. Post-amendment, it was defined as any service rendered within a port in any manner. The Tribunal found that the appellant did not provide services in relation to a vessel or goods, thus the charges did not fall under the definition of port service during the period of demand.3. Invocation of Extended Time Proviso for Demand of Duty:The appellant argued that the SCN dated 21 October 2011, covering the period from 2006-07 to 2009-10, was barred by the period of limitation provided under Section 73 (1) of the Finance Act, 1994. The Tribunal noted that the appellant had been regularly audited and all records were available to the department, thus there was no suppression or misrepresentation of facts. Consequently, the SCN was deemed time-barred.4. Nature of Water Front Royalty as Statutory Levy:The Tribunal referred to Board Circulars and previous rulings, confirming that water front royalty is a statutory levy under the Gujarat Maritime Board Act, 1981, and not a service provided for consideration. This levy is a sovereign function and not subject to service tax.5. Suppression or Misrepresentation of Facts for Evading Service Tax:The Tribunal observed that the appellant had been regularly audited and all financial records were available to the department. There was no evidence of suppression or misrepresentation of facts with the intent to evade service tax. Therefore, the extended period of limitation could not be invoked.6. Previous Tribunal and Supreme Court Rulings on Similar Matters:The Tribunal cited its own previous decision in the case of Gujarat Maritime Board Vs. CCE- Bhavnagar and the Supreme Court's affirmation that water front royalty charges are statutory levies and not subject to service tax. The Tribunal reiterated that the appellant's charges did not constitute a port service and were in the nature of a statutory levy.Conclusion:The Tribunal set aside the order-in-original and allowed the appeal, concluding that the water front royalty charges were not taxable under the Finance Act, 1994, and the SCN was time-barred.