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2014 (4) TMI 445
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....several services like lighterage and local transportation within the port and they have not paid service tax on stevedoring, unloading / loading of cargo in relation to export cargo. Coming to such a conclusion, that services of lighterage of cargo from ship to the berth and transportation of goods and in port area as rendered by the appellant are in relation to vessels or goods in the port area; the said services are fully covered under the taxable head port services; holding such a view a show cause notice was issued to the appellant for the payment of differential service tax liability. The said show cause notice also directed the appellant to show cause as to why interest be not demanded on such differential service tax liability and penalties be not imposed on them. Appellants contested the show cause notice on merits as well as on limitation. The adjudicating authority after granting an opportunity of personal hearing to the appellant and after considering the written submissions made by them, he rejected the contentions raised by the appellant and held that the services rendered by the appellant are classifiable under port services and are liable to pay the differential serv....
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....ich the provisions of Indian Ports Act, 1908 and Gujarat Maritime Board Act, 1981 are applicable is also a distinction which is untenable as grant of authorization by the port could apply in both the Port Trust Acts. It is also his submission that the reliance placed by the lower authorities as well as Ld. Counsel for the Revenue on the judgment of Western Agencies Pvt. Ltd. [2008 (12) STR 739] is also incorrect as Western Agencies decision has not referred to the correct provisions of the Indian Port Trust Act. It is submitted that the minor ports are concerned and are covered by the State Governments who legislate the law governing and functioning of minor ports and in State of Gujarat, it is governed by Gujarat Maritime Board Act, 1981. It is his submission that the said Gujarat Maritime Board Act provides for authorization to perform services specified in the Gujarat Maritime Board Act on such terms and conditions that may be agreed upon. It is his submission that in exercise of the provisions of grant of license, Government of Gujarat has framed the Gujarat....
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....CBEC, it would indicate that for levy and collection of service tax, particular services has to be done under the statute and in the case in hand, there was no authorization and hence part of the activities of the appellant cannot be covered under the services 'port services'. He would also rely upon the decisions of the Apex Court in the case Board of Trustees of the Port of Bombay Vs. Sriyanesh Knitters AIR 1999 SC 2947 for the preposition. The Major Port Trust Act is not a complete code in itself which ousts the applicability of other acts and accordingly application of Indian Contract Act was upheld. It is his further submission that the Chapter 5 of Finance Act, 1994 has incorporated various provisions of other enactments by referential incorporation and with respect to interpreting referential incorporation, it is settled law by the Apex Court that, 'when a single section of an act of parliament is introduced into another act, I think it must be read in the sense in which it bore in the original act from which it is taken, and that consequently it is perfectly legitimate to refer to all the rest of....
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.... tax on sea transportation except for the coastal cargo. It is his further submission that Ld. adjudicating authority has completely ignored the facts that the amounts on which service tax was discharged is again confirmed as a demand and similarly notional income shown in the books of accounts were also considered for the confirmation of the demand without considering the certificate issued by Chartered Accountant. It is his submission that in any case, extended period of limitation cannot be invoked as the various decisions of the Tribunal were holding field as the non-levy of service tax on the stevedoring activities unless authorized by the port. Accordingly, extended period of limitation cannot be invoked is the submission as there is no suppression of fact willful statement to intent to evade payment of service tax. It is his submission that in so far as a second appeal is concerned, the demand therein was raised for a period overlapping with that in the first show cause notice and has also invoked extended period of limitation.....
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....uing invoices showing a consolidated amount including stevedoring, lighterage, loading / unloading of cargo and internal transportation services rendered within the port area. * After September 2002, in the invoices raised by Shreeji the consolidated amount was split into charges for stevedoring / unloading / loading and charges for lighterage and local transportation services rendered within the port area. * In 2003-2004, Shreeji's major income was shown under the 'Head' -'lighterage and shore handling', which stood at Rs.16.93 Crores. In this year, no income was shown under the stevedoring head in the B/Sheet and the same was included in the -'lighterage and shore handling' income. * Two separate invoices were raised by Shreeji one for stevedoring, unloading and loading services and another for lighterage and local transportation services rendered within the port area. * In 2004-05, major income was accounted for as lighterage and local transportation income, which stood at Rs.32.15 Crores. Income from stevedoring / unloading / loading activities was shown as Rs.4.25 Crores. * Two separate invoices were raised by Shreeji one for stevedoring, unloading and loading s....
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....ajor port' and 'other port' refers to a 'minor port' as understood respectively under the Major Ports Act, 1963 and Indian Ports Act, 1908]. The levy of S Tax on 'port service' became effective from 1/7/2003. * Essential elements of the aforesaid definition are (1) the service rendered may be 'any service'; (2) the service may be rendered by a port or any other person authorized by such port or other port; (3) the service may be rendered in 'any manner' and (4) the service rendered shall be 'in relation' to vessels or goods. The definition does nowhere envisage that the services shall be rendered on behalf of the port / other port. * Expressions 'any service' and 'in any manner' and 'in relation to' appearing in the aforesaid definition are of wide amplitude. They are exhaustive in coverage and would include all services rendered within the port area in so far as they relate to vessels and / or goods. * As per Section 65 (76) of FA, 1994, 'other port' has the meaning assigned to 'port' in clause (4) of section 3 of the Indian Ports Act, 1908 (15 of 1908), but does not include the port defined in clause (81). * What is incorporated by reference in the aforesaid Sec....
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....one and [Page 3931 ibid] vide page 28 of submissions, In the popular as also in the legal sense, a licence is a permission to do something which, without the licence would not be allowable. In the secondary sense, it denotes a certificate or document which embodies the permission in question. Thus, common as well judicial understanding points to the fact that being authorized as well as being licenced connote the same thing, namely being granted permission to do an act, which is otherwise not allowed under the law without such permission. The services rendered by Shreeji are under the licences / permissions granted by the GMB and they should be regarded as having been authorisedby the other port. > Secondly, a close study of Section 32 of GMB Act and the Notifications issued thereunder would reveal that the authorization referred to therein is essentially with reference to the Port Officers. Besides, they alone are authorized to charge or recover the amount leviable as State charges vide sub-section (4) of Section 32. The rates are ostensibly for services e.g. berthing etc. facilities provided by the Port itself. > Thirdly, sub-section (1) of Section 32 covers specifically, s....
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.... the ship anchored away from the port, loading such cargo on to barges / tugs, transportation such cargo to wharfs / berths using barges / tugs, unloading of cargo from barges / tugs onto the wharfs / berths and subsequent transport of the said cargo to shortage plots within the port area are services rendered within the port answering the description of port service. These services are undertaken in terms of the authorization or permission given under the licences granted to them by GMB. The observations of the Larger Bench of the Honble Tribunal in Paras 11 and 12(c) of their Order in the case of Western Agencies Pvt. Ltd. and others [2011 (220) STR 305 (T-LB)] also support this view. III. On the case law relied upon by the appellants, the submissions are as follows: (A) Homa Engineering Works [2007 (7) STR 546 (T)] Activities in question were, repairing, chipping, cleaning and painting of vessels. The Tribunal examined the issue with reference to Sections 35,36,42,48 and 49A of Major Ports Act, 1963 and took the view that * services which can be taxed under Port Services have to be either services rendered by the port itself or any person authorized by such port; ....
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....E FROM THE FACTUAL LEGAL ISSUES OF THE PRESENT CASE. (C) Konkan Marine Agencies [2007 (8) STR 472 (T)] Activities in question were, export of iron ore fines i.e. handling export cargo. Tribunal examined the issue with reference to section 42 of MPTA, 1963 and took the view that, * Konkan, who had a stevedoring licence performed only the services of handling of export cargo. * Such services were not on behalf of the port; hence, they were not covered under port services. * Services rendered by Konkan were Cargo handling services but being only in respect of export cargo, was excluded from the levy of S Tax. In appeal, the High Court of Karnataka held as follows: * Stevedoring licence issued in favour of Konkanas per Rules of NMPT, 1976 issued by the Govt. of India. It satisfied the mandate under Section 42(3) and it constitutes authorization. [Para 7]-* - [* This finding supports the view that licensing of stevedores constitutes authorization under the Port Acts] * Activities of Konkan were not covered by port service for the simple reason that the definition of Cargo handling serviceand section 65(23) of FA, 1994 clearly puts a bar w.r.t. imposition of tax on e....
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....vities/operations like intercarting (transportation of cargo after its unloading from a vessel, to a place of storage within the port area), storage of cargo in plots allotted by the Port, blending of different grades of coal in the port area and other kinds of cargo handling in the port area (other than export of cargo) can be held to be services ancillary to stevedoring and classifiable as port servicesunder Section 65(82). The discussion of the issues involved as set out in Paras 9.1 to 9.16 and 10.1 to 10.3 and 11 of the above Order of the LB clearly explain that rationale underlying the view taken as above and the same are relied upon by Revenue in support of its case. It must be added that further hearing in the main appeal of the same appellant has been stayed in the interim by the Madras High Court. It is understood that hearing by the High Court on the issue of interim stay has been concluded and the decision is awaited. VI. A related argument advanced is that the amendment made by expanding the scope of the definition of Port Service by the Finance Act, 1994, wherein there is no pre-condition of any authorization from the Port authority for taxing the services rende....
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....elements as well. This was premediated. They suppressed the above facts, thus invoking of extended period of limitation is justified. Further, by 2003, there was no judicial pronouncement relating to non-taxability of lighterage and local transportation charges under the category of Port service. X. As regards the liability to interest u/s. 75 of FA, 1994 and the imposition of penalty u/s. 76 ibid, the findings of the respondent in Paras 27 to 34 of the OIO are reiterated. XI. In view of the above submissions, the Appeal bearing No.ST/473/2009 filed by M/s. Shreeji Shipping may be held to be devoid of any merit. 5. Both sides filed two rejoinders which are considered by us while arriving at a conclusion. 6. We would like to record that there is a point in the submissions made by Revenues Counsel as regards the submission or disposal of appeal no.ST/11274/2013. It is seen from the records that Revenue has not authorized Special Counsel for appearing in this matter hence the prayer of the Ld. Special Counsel for delinking this appeal from the said appeal is accepted and our findings will be limited to the issue involved in appeal no.ST/473/2009-DB only. Registry is dir....
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....cognate legislature governing the rendition of such services. For ease of reference some illustrative services are being extracted herein below: a. Chapter V of the Finance Act, 1994, initially introduced the levy of service tax on following three services viz. Telegraph Services, General Insurance Services and Stock Broker Services. Each of them was governed or regulated under a specific enactment and the Finance Act, 1944 has also borrowed the counters of the taxing entry with reference to same, as can be seen from the relevant definitions extracted herein below: Stock Broker Services: Definition 65(13) "stock broker" means a stock-broker who has either made an application for registration or is registered as a stock-broker in accordance with the rules and regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992); Taxable Service 65(16)(a) to an investor, by a stock-broker in connection with the sale or purchase of securities listed on a recognized stock exchange; Telegraph Services Definition 65(17) "telegraph authority" has the meaning assigned to it in clause (6) of section 3 of the Indian Telegraph Act, 1885 (13 of 188....
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....otor Vehicles Act, 1988 (59 of 1988); Taxable Service 65(41)(r) any service provided to any person, by a rent-a-cab scheme operator in relation to the renting of a cab; Architect Service 65(5) architect means any person whose name is, for the time being, entered in the register of architects maintained under section 23 of the Architects Act,1972 (20 of 1972) and also includes any commercial concern engaged in any manner, whether directly or indirectly, in rendering services in the field of architecture; Taxable Service 65(48)(p) to any client, by an architect in his professional capacity in any manner; Practicing Chartered Accountant Definition 65(31) "practising chartered accountant" means a person who is a member of the Institute of Chartered Accountants of India and is holding a certificate of practice granted under the provisions of the Chartered Accountants Act, 1949 (380 of 1949) and includes any concern engaged in rendering services in the field of Chartered Accountancy; Taxable Service 65(48)(s) to any client, by a practicing chartered accountant in his professional capacity, in any manner; Practicing Cost Accountant Definition 65(3....
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.... of the Information Technology Act, 2000 (21 of 2000); Taxable Service 65(72)(zh) to a customer, by a commercial concern, in relation to on-line information and database access or retrieval or both in electronic form through computer network, in any manner; Forward Contract Definition 65(46)(a) forward contract has the meaning assigned to it in clause (c) of section 2 of the Forward Contracts (Regulation) Act,1952 (74 of 1952); Taxable Service 65(105)(zzy) to any person, by a member of a recognized association or a registered association, in relation to a forward contract; Cable Services Definition 65(20) cable service shall have the meaning assigned to it in clause (b) of section 2 of the Cable Television Networks (Regulation) Act, 1995 (7 of 1995); Taxable Service 65(90)(zs) to a customer, by a cable operator in relation to cable services; 11. Even in respect of port services the ambit of the said service in the Finance Act, 1994 has been circumscribed by the provisions governing ports in India. The expression authorized by the port has a specific connotation under the Major Port Trusts Act, 1963 (which governs all Major Ports) as also under....
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.... scope and ambit of several services with respect to the cognate legislation which govern such services. 12. The appellant had in the course of personal hearing brought on record an authorization issued by the GMB vide Notification No.GMB/T/12(25)/37-38/2007-16 dated 08.08.2007 in exercise of powers conferred under Section 32(3) of the GMB Act, 1980, authorizing M/s. Atash Nor Control Ltd. to provide for Vehicle Traffic and Port Management Services in the Gulf of Khambhat and recover fee for the same as has been fixed in Section 37, 38, 41 and 42 of the GMB Act, 1980. No such authorization under Section 32(3) has been brought on record in respect of the services being rendered by the appellant. In our view, in the absence of an authorization having been issued in favour of the appellant under Section 32(3) they cannot be said to be rendering any service which has been authorized by the port, which alone have been taxed under the head of port services at the relevant point of time. 13. It is also a settled law laid down by the Apex Court in the case of Surana Steel Pvt. Ltd. Vs. Dy. Commissioner of Income Tax, reported in 1999 (4) SCC 306, that in a case of in case of referent....
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....was negated by the Apex Court. In the case in hand there is no exception to the provisions which have been incorporated, which the appellant wants us to read in the Finance Act and consequently there is no infirmity is drawing meaning of the expression authorized by the portfrom the legislation governing ports, which have specifically been referred to and incorporated in the Finance Act, 1994. It is settled law laid down by the Apex Court in the case of Alnoori Tobacco Products Ltd. Vs. CCE, 2004 (170) ELT 135 that case laws cannot be applied as Euclids theorems as circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. We also take note that Honble Bombay High Court has in the case of Shamrao Vitthal Co-operative Ltd. Vs. Star Glass Works reported in AIR 2003 Bom 205, dealt with the judgments of the Apex Court in the case of Onkarlal Nandlal Vs. State of Rajasthan, Surana Steels Vs. CIT and the decision of Lord Blackburn in the case of Portsmouth Vs. Smith and held that it is open to the Court to refer to the provisions of the Act from which provision have been incorporated in a subsequent Act, though not specif....
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....317 held that it is not only in a case where two Statutes have the same purpose that the principle of parimateria statute can be applied but the same also applies if the two statutes being construed relate to i) the same person of things; or ii) to the same class or person or things; or iii) have the same purpose or object. The Larger Bench had not examined clause (i) and (ii) above before holding that the two statutes were not pari-materia. The Counsel for the appellant has argued that levy of service tax on Port service is with reference to the services rendered by a Major Port or a Minor Port or a person authorized by such Major Port or Minor Port and consequently the levy under the Finance Act, 1994 was clearly relating to the same class of person or things / class of persons or things which the Ports Act was covering and consequently the two statutes were pare-materia. We find that it is an undisputed position that the Ports Act specifically provides for service....
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....ease of reference. 13. We have not found any corresponding provision in the Indian Ports Act specifying services to be provided by a minor port or a person authorized by such Port. (Section 35 of the Indian Ports Act, which provides for charging of fees by a minor port for pilotage, hauling, mooring, remooring, hooking, measuring and other services rendered to vessels, however, seems to indicate that a minor port can get these operations undertaken by a licensee or authorized person) Would it mean that, in respect of minor ports - our country has as many as 187 minor ports (as per the records of the Ministry of Shipping, Govt. of India) as against only 12 major ports - in this country, no activity/operation (including stevedoring) is liable to be exigible to service tax under the head port services defined under Section 65(82) ibid ? Certainly, the law of service tax cannot be expected to have envisaged such an anomalous situation. It is a cardinal principle of statutory interpretation that, when the language of a statute is capable of two interpretations, one of which is reasonable and the other unreasonable, the court should hold that the former must prevail. We find that i....