Nature of services rendered

[sanjay nayak]

we are a patnership firm engaged with stevdoring, customs clearing etc inside port permises. we are also handling export cargo as intraport, loading into vessels. What will be the nature of service. i.e. - port service or cargo handling service. further we were considering the same as cargo handling service and was not charging service tax for the export cargo handled by us. now we got a show cause notice from stax dept that this is under port service and no exemption is there. now for the period apr 09 to aug 09 for which we had not charged service tax to our parties, we are charging under port service as a supplymentary bill for the service tax part only. can our parties avail cenvat credit on these supplymentary invoices.

[Rama Krishana]

The services under port category can fall only where the person is authorized by the port authority to provide port services. Merely providing cargo handling services inside port area can not constitute port service. The firm, who is providing services, whether a authorized person by by a port or other port or any person authorised by such port or other port, in any manner, in relation to a vessel or goods is relevant. As per your query it appear that on the one side you wish to contest the demand and on the other side you have accepted the action of the department and wish to recover the same through supplementary bills. So more details and information required for this issue.

[sanjay nayak]

dear sir, now we are trying to pay under protest. so kindly clarify weather we can raise supplymentary bill for the services provided earlier or to modify the bills. if we raise add bill for only stax part, can our client will able to take the cenvat credit on those add bills. if yes what is the proper way.

[Surender Gupta]

There is no provision in Cenvat Credit for availing cenvat credit on supplementary invoice for taxable services. Supplementary invoices are allowed only for excisable goods. But, any how, since you have decided to surrender before the department under protest, how you can pass the benefit to the customers. Under protest means you have not accepted the liability fully. If you pass the benefit to the customers, there is no need to pay under protest, therefore, be careful for making decision. On the other side, once you decided to pay / surrender you should claim the reimbursement from your clients, if permissible as per mutual agreement. No doubt the department would try to deny the benefit to your client on the basis of such bill or invoice (do not call it supplementary invoice or bill) under the provisions of rule 9 - any demand beyond one year if confirmed on the ground of application of extended period of limitation beyond one year - your client may find himself in a difficult position after availing credit on such transaction.

AI Summary

Stevedoring Firm Seeks Clarification on Service Tax Classification: Port vs. Cargo Handling Services; Considers Supplementary Billing A partnership firm engaged in stevedoring and customs clearing within port premises sought clarification on whether their services should be classified as port services or cargo handling services. They had been treating these as cargo handling services and not charging service tax for export cargo, but received a notice from the tax department classifying them under port services, which are not exempt. The firm considered issuing supplementary bills for service tax from April to August 2009. Responses indicated that only authorized port services fall under the port category, and there is no provision for Cenvat credit on supplementary invoices for taxable services. The firm was advised to consider the implications of paying under protest and how to handle client reimbursements.