Port dues retention under concessionaire arrangement not taxable as separate service consideration

Retention of 15% from port dues under a concessionaire arrangement was treated as a book adjustment from a statutory fund earmarked for maintenance and overheads, not as an independent consideration paid by the Government. Because the port dues had already suffered service tax and the appellant was engaged to maintain the port rather than act as a commission agent for the Government, the same receipt could not be taxed again as Business Auxiliary Service or Port Services. The service tax demand was therefore unsustainable.

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Issues: Whether the appellant's retention of 15% from port dues fund, earmarked for maintenance and overheads under the concessionaire arrangement, constituted consideration for taxable services as Business Auxiliary Service or Port Services, so as to attract service tax.

Analysis: The port dues were statutory levies collected from port users and had already suffered service tax. The retained 15% was not an independent payment made by the Government of Andhra Pradesh to the appellant, but only a book adjustment from the same statutory fund used for agreed maintenance works within the port. The arrangement showed that the appellant operated as the concessionaire required to maintain the port from the port dues fund, and not as a commission agent rendering services on behalf of the Government. On these facts, the same receipt could not be treated as a separate taxable consideration, and taxing it again would amount to taxing the same service twice under the same head.

Conclusion: The retention of 15% out of port dues was not liable to service tax under Business Auxiliary Service or Port Services, and the demand was unsustainable.

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