TaxTMI 
TaxTMI 
2014 (7) TMI 972
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....ave prescribed the rate of shipping and landing fees and other charges in the schedule of port charges, which has been notified. As per the policy drafted by the Government of Gujarat for development of minor port, the appellant entered into an agreement with M/s. Ultratech Cement Ltd. (hereinafter referred to as M/s. UCL), wherein a licence was given to M/s. UCL to construct and use captive jetty near to their factory premises. As per terms and conditions of ownership of structures/construction vested with the appellant and the licencee, i.e., M/s. UCL did not have any title, interest or other proprietary rights in respect of such construction. To put it other way, M/s. UCL got the rights to use the structures built up by them, but not the ownership of the said structures, the appellant herein did not provide any services in respect of the said captive jetty as the operation and maintenance of said captive jetty written submissions the responsibility of licencee M/s. UCL, as per clauses in agreement (clause 22), licencee M/s. UCL has to pay shipping and landing fees (popularly known as "wharfage" charges) at 20 per cent. of the actual landing and shipping fees, specified in the sc....
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.... tax. 4.1.1 As per the port policy of State Government of Gujarat, the appellants have given licence/right to construct and operate captive jetty to M/s. Ultratech Cement Ltd. The appellants prescribe the rates for various services provided by them at various places which include charges to be levied for captive jetties. The appellants have collected only 20 per cent. of such notified charges for captive jetties from the licensee. M/s. Ultratech Cement Ltd., has paid that amount only to the appellants. The appellants have raised the invoices showing that amount only as the charges for services and paid service tax on that. The appellants have also filed an affidavit of the Finance Controller of the appellants that they have shown as income only that amount which is charged to the recipient of services, i.e., M/s. Ultratech Cement Ltd. The case of the Department is that the appellants should have paid service tax on 100 per cent. of notified rate for captive jetties. The undisputed fact in this case is that the appellants have, in fact, collected only 20 per cent. of the notified rate for captive jetties from the licencee M/s. Ultratech Cement Ltd. In other words, the Department ....
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.... 4. Therefore, section 4 of the 1944 Act requires the Department to find out the real value of the excisable article. As stated above, excise law is a tax on value. This is the most important distinction between the excise law and the sales tax law." 4.1.4 In case of service tax also, there is no concept like intrinsic value of services. Service tax is levied on the amount charged/received/collected from the customers. The above view taken by the honourable Supreme Court is fully applicable to service tax provisions also. Therefore, for this reason, the demand is liable to be set aside. 4.1.5 The honourable Bombay High Court in the case of Inox Air Products Ltd. v. Commissioner of Central Excise and Customs [2012] 53 VST 79 (Bom); [2012] 15 GSTR 429 (Bom) in Central Excise Appeal No. 19 of 2012 observed as under (pages 83 and 84 in 53 VST): "10. Perusal of the aforesaid provision would show that where the consideration for the services rendered is in terms of money, then the gross amount charged by the service provider would be the value of taxable service. But, where the consideration for rendering the service is charged partly in terms of money and partly in kind, then, ....
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....utes the consideration in kind received by the assessee." 4.1.6 Recently, the honourable Delhi High Court in the case of Intercontinental Consultants and Technorats P. Ltd. v. Union of India [2013] 59 VST 487 (Delhi); [2013] 19 GSTR 462 (Delhi); [2012] TIOL 966 (Delhi); [2013] 29 STR 9 (Delhi), has held that reimbursement of expenses cannot be brought to charge under section 66 of the Finance Act, 1994. The relevant extract of the said decision is given below (paras 10, 20, pages 496, 497, 501 and 502 in 59 VST): "10. The contention of the petitioner that rule 5(1) of the Rules, inasmuch as it provides that all expenditure or costs incurred by the service provider in the course of providing the taxable service shall be treated as consideration for the taxable service and shall be included in the value for the purpose of charging service tax goes beyond the mandate of section 67 merits acceptance. Section 67 as it stood both before May 1, 2006 and after has been set out hereinabove. This section quantifies the charge of service tax provided in section 66, which is the charging section. Section 67, both before and after May 1, 2006 authorises the determination of the value of t....
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.... enables the determination of the value of the taxable service 'in such manner as may be prescribed' is expressly made subject to the provisions of sub-section (1). The thread which runs through sections 66, 67 and section 94, which empowers the Central Government to make rules for carrying out the provisions of Chapter V of the Act is manifest, in the sense that only the service actually provided by the service provider can be valued and assessed to service tax. We are, therefore, undoubtedly of the opinion that rule 5(1) of the Rules runs counter and is repugnant to sections 66 and 67 of the Act and to that extent it is ultra vires. It purports to tax not what is due from the service provider under the charging section, but it seeks to extract something more from him by including in the valuation of the taxable service the other expenditure and costs which are incurred by the service provider 'in the course of providing taxable service'. What is brought to charge under the relevant sections is only the consideration for the taxable service. By including the expenditure and costs, rule 5(1) goes far beyond the charging provisions and cannot be upheld. It is no answ....
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.... 25 (Trib.-Bang), which holds that no tax at all is payable. 4.3.1 The Cochin Port Trust entered into an agreement with M/s. India Gateway Terminal Pvt. Ltd. for operation and maintenance at port. The Cochin Port Trust also entered into an agreement with M/s. IGTL to develop and operate a terminal called Rajiv Gandhi Container Terminal (RGCT) in the port area. The agreement was for the period of 30 years and as per the agreement, IGTL shall pay to the Cochin Port Trust a royalty at 33.33 per cent. of the gross revenue earned from such operations. The case of the Department in that case was that the said royalty received by Cochin Port Trust is liable to tax under the taxable category of port services. 4.3.2 The Tribunal held as under (page 109 in 45 VST): "5. We have carefully perused the case records and considered the rival submissions. We have also heard the learned Senior Departmental Representative for the Revenue. We find as follows: '5.1 The impugned demands are under port services rendered by CPT. The relevant entry in clause (82) of section 65 of the Act read as under during the period of dispute: Port service means any service rendered by a port or othe....
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...., etc., will not be liable to service tax as these are not services rendered in relation to goods or vessels. For any other charge not mentioned above, the Commissioner may decide the inclusion/exclusion in the value of taxable service on merits." 4.3.5 It is clear from the facts mentioned above that the appellants have not provided any services in relation to vessel or goods and therefore, as per the Board Circular also it cannot be covered under the definition of "port services". The entire demand is liable to be set aside. 4.4 The appellants have discharged their sovereign function by giving right to construct and operate captive jetty. No service tax can be demanded on amount received for discharging sovereign function. 4.4.1 Article 246 of the Constitution of India prescribes subject-matter of laws made by Parliament and by the Legislatures of States. Article 246(2) states as under: "(2) Notwithstanding anything in clause (3), Parliament and, subject to clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as 'Concurrent List'....
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....ities is in the nature of compulsory levy as per the provisions of the relevant statute, and it is deposited into the Government treasury. Such activity is purely in public interest and it is undertaken as mandatory and statutory function. These are not in the nature of service to any particular individual for any consideration. Therefore, such an activity performed by a sovereign/public authority under the provisions of law does not constitute provision of taxable service to a person and, therefore, no service tax is leviable on such activities." 4.4.7 The same view is reiterated in Master Circular dated August 23, 2007, which is as under: "999.01/ 23/8/07 Sovereign/public authorities perform functions assigned to them under the law in force, known as 'statutory functions'. For example, Regional Reference Standards Laboratories (RRSL) undertake verification, approval and calibration of weighing and measuring instruments; Activities assigned to and performed by the sovereign/public authorities under the provisions of any law are statutory duties. The fee or amount collected as per the provisions of the relevant statute for performing such functions is in the nat....
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.... If such authority performs a service, which is not in the nature of statutory activity, for a consideration, the same shall be taxable. 8.6.4 However, the taxable services provided by a banking company or a financial institution including a non-banking financial company, or any other body corporate or any other person, to the Government of India or the Government of a State, in relation to collection of any duties or taxes levied by the Government of India or the Government of a State, are exempted from payment of service tax. (Notification No. 13/2004-S.T., dated September 10, 2004 as amended). 4.4.9 The same views were reiterated in FAQ 2010 dated September 1, 2010 issued by DGST which are as under: "8.6 Is there any exemption from payment of service tax if the receiver/provider of the service is the Central/State Government organization and public sector undertakings? 8.6.1 No. There is no such exemption. All service providers, including the Central/State Government organisations and the public sector undertakings rendering the specified taxable service, are liable to pay service tax. 8.6.2 If a Government Department (sovereign)/public authorities performs any ma....
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....t the Board's Circular No. 141/52/95-CX and 195/20/CX views this activity to bring them under the definition of 'goods' for exigibility. There is no merit in the Revenue appeals and the same are rejected and the appeal of M/s. Bajarang Infotech Systems Pvt. Ltd. is allowed with consequential relief, if any." 4.4.11 The appellants also place reliance on Electrical Inspectorate/ Chief Electrical Inspector to Government of Karnataka v. Commissioner of Service Tax, Bangalore [2008] 12 VST 339 (CESTAT-Bang); [2008] 9 STR 494 (Tri-Bang), wherein it was held as under (para 7, pages 342 and 343 in 12 VST): "6. On a careful consideration, we notice that the appellant is a State Government Department. It is carrying on sovereign activity of inspection and certification of electrical installations in terms of special legislations. Revenue has proceeded on the ground that these activities come under the heading of 'technical inspection and certification services'. This is contested by the appellant on the ground that the activity has to be performed in terms of the Electricity Act and the Government Department has to carry on this activity as a sovereign function and ....
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.... as under: "4. We have considered the submissions. We find that the issue in this case has already been decided in terms of final order rendered in the case of CCE, Hyderabad v. Bajarang Infotech Systems Pvt. Ltd. & CMC Limited by Final Order Nos. 779 to 782/2007 dated July 23, 2007 [2008] 12 VST 335 (CESTAT-Bang); [2007] 7 STR 702 (Trib.). The order also covers the cases of CMC Ltd. and Kerala State Electronics Development Corporation Ltd. This Tribunal after due consideration and also applying the ratio of CCE, Indore v. Ankit Consultancy Ltd. [2008] 12 VST 327 (CESTAT-New Delhi); [2007] 6 STR 101 (Trib.-Delhi) has held that the activity of preparing elector photo identity cards cannot be considered to fall within the ambit of photographic services as per section 65(78) as well as section 65(79) of the Finance Act. We find that the issue is fully decided in assessee's favour. The impugned order passed by the Commissioner (Appeals) is legal and proper. There is no merit in this appeal and the same is rejected." 4.4.13 It is clear from the above facts and observation of the honourable Supreme Court that the appellants are a statutory body and discharging the functions und....
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....ax as what they are doing is only in discharge of their sovereign function. This argument has no merit on account of the following grounds: (a) This ground was never raised by GMB, either before the adjudicating authority or in their appeal memo before the CESTAT. They have never filed any application before the Bench seeking its permission to raise this ground. Hence, in keeping with rule 10 of the CEGAT (Procedure) Rules, 1982, they should not be allowed to raise this issue at this juncture. Reliance is placed on the decision of the CESTAT in the case of Vohra Dyeing v. Commissioner of Central Excise [2010] 259 ELT 605 (Tri-Del). (b) The port services performed at the major ports were brought under the service tax net in 2001. The port services at minor ports were brought under tax net from July 1, 2003. Since in the present case, GMB is providing the port service to an individual (M/s. L&T) and charging a consideration in lieu of the same by raising an invoice, this activity is covered under the ambit of service tax, as per aforesaid circular of CBEC. A proposition supported by the order of Tribunal, in the case of Karnataka State Warehousing Corporation v. C.S.T., B....
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....g charges, are part of port services. The honourable Supreme Court in the case of Commissioner of Trade Tax, U.P. v. Kajaria Ceramics Ltd. [2005] 141 STC 406 (SC); [2005] 5 RC 204; [2005] 191 ELT 7 (SC) has, in para 28 of its judgment, held that Departmental circulars are contemporaneous official expositions which can be used as an aid to interpret the intention of notifications and recent statute. Hence, the Department's aforesaid circular, laying down that wharfage is a part of port service, has to be relied upon to interpret the true ambit of port service. (c) Section 37 of the Gujarat Maritime Board Act, 1981 lists "services" in respect of which GMB may frame a schedule of rate. Landing and shipping of goods from or to vessels and wharfage, inter alia, are some of the services listed therein. Hence, the GMB Act itself envisages landing/shipping/wharfage as services. Hence, the same will be definitely covered under the ambit of port services definition of which states that any service provided in any manner rendered by the port or person authorised by it in relation to vessel or goods, is a port service. (d) In a similar case of a minor port where service was being pro....
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....M/s. L&T, was always a property of GMB, as per the agreement between the two of them. Hence, it was always understood between the two of them that GMB was the service provider and L&T was the service recipient. That is why L&T has been paying due service tax on 20 per cent. of the wharfage to GMB and GMB, in turn, has been paying the service tax to the Government and also filing returns. (b) Since the jetty, initially funded by L&T, is always a property of the GMB (clauses 12 and 18 of the agreement between GMB and L&T refer), it is only the GMB which can, as the owner of the jetty, provide the services of landing/shipping, etc. (c) Clause 17 of the said agreement lays down that "In consideration of the Board permitting the licensee to construct the captive jetty at its own cost initially, the Board hereby agree that the jetty to be so constructed by the licensee shall be mainly and initially as per the terms of this agreement, allowed to be used for the vessels belonging to the licensee or chartered by the licensee, on preferential basis without any ousting priority . . ." The use of the expression "allowed to be used" clearly means that, as the owner of the jetty, it is ....
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.... a specific NO OBJECTION to M/s. L&T in this regard, even while underlining, in a host of other clauses, that the ownership of the jetty belongs to GMB. When the relationship between GMB and L&T is governed by a specific contract, the ownership of the jetty cannot be decided by inference, when clause after clause of the agreement lays down in unequivocal terms that the ownership of the jetty will always vest with GMB. In the case of Cochin Port Trust v. Commissioner of Central Excise, Cochin [2011] 45 VST 106 (CESTAT-Bang); [2011] 21 STR 25 (Tri-Bang), which is heavily relied upon by the appellants (GMB) and the Commissioner (Appeals) (in case of Departmental Appeal No. ST/403/2011), the ownership of the movable and immovable assets was with M/s. IGTPL, who were providing port services to third parties and paying service tax on the same. On account of this crucial difference in facts, the ratio of the decision in Cochin Port Trust case [2011] 45 VST 106 (CESTAT-Bang); [2011] 21 STR 25 (Tri-Bang), cannot be applied to the present cases. The honourable Supreme Court, in the case of Collector of C. Ex., Calcutta v. Alnoori Tobacco Products [2004] 170 ELT 135 (SC), has ruled that....
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....ement clearly show that rebate is only a mechanism of book adjustment between M/s. L&T and GMB as L&T, on account of having invested in the jetty, which is a property of GMB from the word go, are entitled to recover from GMB the cost of construction. The amount of rebate can be called as recovery in lieu of capital investment by L&T only when the same is otherwise payable to GMB. It is also clear from the fact that, apart from granting rebate from wharfage, GMB is not paying any other sum to L&T in lieu of the capital investment by L&T. (b) It is agreed that, as per sections 40 and 41 of the GMB Act, 1981, GMB has the power to fix lower rates in special cases. However, section 40 of the said Act grants this power only in respect of "coastal goods" and "other goods in special cases". Apart from the fact that, in the instant case, the jetty rebate is to a particular client and not to a class of goods. It is also important to note that the powers under section 40 have not been exercised in this case as neither the notification dated July 9, 2003 nor the agreement between the two parties invokes section 40 of the GMB Act. (c) As per conditions (1) and (2) given under Schedule D o....
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....bed rate of payment of port charges, but the same was only an adjustment from the standard rate in order to fully reimburse the cost of construction out of the receipts towards the port charges, cannot be allowed to be deducted from the value of taxable service for calculating the service tax liability. (f) The definition of "taxable value" under section 67, as it stood during the material time of dispute in this case, was explained by means of certain Explanations. Explanation (b) to section 67 reads as under: "Explanation.-For the removal of doubts, it is hereby declared that the value of a taxable service, as the case may be, includes,- (a) . . . . (b) the adjustments made by the telegraph authority from any deposits made by the subscriber at the time of application for telephone connection or pager or facsimile or telegraph or telex or for leased circuit;" As held by the honourable Supreme Court in the case of Sulochana Amma v. Narayanan Nair [1995] 77 ELT 785 (SC): "8. It is settled law that Explanation to a section is not a substantive provision by itself. It is entitled to explain the meaning of the words contained in the section or clarify certain ambiguit....
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.... This argument of M/s. GMB merits to be simply disregarded on the following ground: The Department's case is simply that the gross wharfage charged by GMB from L&T is as per the Schedule D of their notification dated July 9, 2003 while service tax is being discharged only on 20 per cent. of the wharfage charges. It is the contention of the Department that rebate of 80 per cent. of the wharfage is actually a book adjustment in lieu of the return of the cost of construction of jetty which was incurred by L&T. It is never the stand of the Department that the cost of the jetty has to be added to the wharfage charges for arriving at the taxable value. Had GMB paid service tax on the gross wharfage received, as per the rates prescribed in Schedule D, Department would not have issued any demand by claiming that cost of construction of jetty also needed to be included in the taxable value. Hence, the arguments advanced by GMB as above, are plainly misleading. 5.2 Lease rent for waterfront and way leave facility compensation: The other element of demand in the present two appeals is in respect of "lease rent for waterfront and way leave facility compensation". In Appeal No. ST/....
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....zed by the 1994 Act. Accordingly, any service provided by a 'Port' or 'other port' fall under one class of service called the 'port services'. Nomenclature of service not being decisive, charging provision of the 1994 Act prevails. It is not possible for Legislature to provide an exhaustive list of service to be classified as 'port service'. Therefore, Legislature defined the term port service using the terms 'any service' rendered by a port 'in any manner' in relation to 'vessel or goods' to bring to the net of taxation. Innovative means to name a service does not take away a taxable service from the scope of taxation. When a service is attributable or inevitable or indispensable for the functioning of the 'port' or 'other port' and advances the object of setting up of the ports, such service is said to have been provided by a port or other port. Thus, the very nature of services under the category of 'any ser vices' encompassed by the term 'port service' does not exclude any service provided by a port or other port to serve the purpose of the port . . ." In view of the above decision, just ....
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....essment, the Department is not privy to the private records of the assessee unless the records are requisitioned in audit. Hence, the Department had no means of knowing whether the value on which tax was discharged, was the correct value or not. The appellant had suppressed the facts regarding the correct value of the taxable service being provided by them. The fact that the so-called "rebate" was actually a reimbursement of the cost of construction incurred by M/s. L&T, and that the same would have stopped as soon as the cost of construction was fully reimbursed in this way, would have been known only to the two contracting parties. Since, minor ports were covered under the ambit of port services only from July 1, 2003, and since the agreement in this case was entered into between GMB and L&T on February 28, 2000, GMB was fully aware of the contents of its agreement with L&T and the scope of taxability under port services. By keeping silent about the contract and its provisions and by paying tax on the depressed value for the purpose of service tax, M/s. GMB has intentionally evaded service tax. When minor ports had come under the ambit of service tax from July 1, 2003, the least ....
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....on of the Tribunal in the case of Spie Capag S.A. v. Commissioner of Central Excise, Mumbai [2009] 243 ELT 50 (Trib.-Mum.), is appropriate. In that case, while dealing with the plea of bona fide belief, the Tribunal observed that 'the least that was expected of the appellant to discharge the plea of bona fide belief was to make enquiries from Central excise authorities or some reputed legal firm regarding dutiability of items manufactured by it.' Therefore, we find ourselves in agreement with the submissions that the appellant could not have interpreted the law according to their understanding without taking sufficient care for their interpretation, is correct. In the absence of any evidence to show that the appellant had intimated the Department or had obtained legal opinion, invocation of extended period on the ground of suppression of facts has to be upheld." The appellants are not a small unit unfamiliar with the service tax laws. When a new levy was introduced, it was their bounden duty to seek proper professional help or at least the Department's opinion regarding their tax liability. They could have brought to the notice of Department the agreement entered int....
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....nner Systems v. Commissioner of Central Excise & Customs, Pune [2005] 191 ELT 1051 (Tri-Mumbai) (ii) Tanzeem Screenarts v. Commissioner of Central Excise, Mumbai-I [2006] 196 ELT 209 (Tri-Mumbai) (iii) Interscape v. Commissioner of Central Excise, Mumbai-I [2006] 198 ELT 275 (Tri-Mumbai) (iv) Camlin Ltd. v. Commissioner of Central Excise, Mumbai-IV [2009] 239 ELT 346 (Tri-Mumbai) (e) Similarly, it has been consistently held by various judicial fora that "ignorance of law" is no excuse. In this regard, the following decisions are cited: (i) R.G. Nagori & Sons v. Collector of Central Excise [1989] 39 ELT 303 (Tribunal). (ii) Sindhu Resettlement Corpn. Ltd. v. Commr. of Central Excise, Rajkot [2000] 118 ELT 182 (Tribunal). (iii) CCE, Rohtak v. Bindal Cotex (P) Ltd. [2004] 165 ELT 298 (Tri-Delhi). 5.4 Revenue Neutrality: The appellants have also taken the plea of revenue neutrality by submitting that whatever service tax was short paid by the appellant would have been available as credit to M/s. L&T, hence there was no reason to evade payment of service tax. This contention of the appellant would mean that none of the cases of clandestine removal would sta....
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....t its own cost and whosoever using the same, the appellants charges Rs. 100 per ship on account of wharfage and discharges service tax on the same under category of port services. In the case in hand, even though the waterfront belongs to the appellant, they did not do anything and by an agreement, consequent to Maritime Policy as envisaged by the Government of Gujarat, permitted M/s. Unitech Ltd. to construct entire port at their own cost. M/s. Unitech Ltd. has invested money and has developed a port on the said waterfront, for use of the said port for conveyance of raw material for their cement plant situated in the vicinity. M/s. Unitech Ltd. has developed all infrastructure facilities as required in a port and this has been under the build, own, operate and transfer scheme. Thus, the said port has been built by M/s. Unitech Ltd. as per the agreement, operated by M/s. Unitech Ltd. and was to transfer the same to the appellant at the end of 10/20 years. The terms of agreement entered into between the appellant and M/s. UTL as envisaged charge of Rs. 20 as wharfage charges per ship anchoring in the port which will be exclusively used by M/s. UCL. The appellant has paid the service....
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....rship of waterfront, GMB does not own anything. The port and the infrastructure thereon vests in M/s. UCL Ltd. and this is permissible under Indian Law as there can be two owners, one for the waterfront and another for port and infrastructure thereon. The law in India is that land can belong to one and building thereon can be of other person as compared to law in U.K. wherein building vests in the owner of the land. 8.5 Thus, in the absence of any port service having been rendered by GMB, the question of charging differential service tax under the category of port service does not arise at all. The show-cause notice has not invoked any other head for taxing the service, if any. 8.6 As mentioned above, GMB has not invested any amount whatsoever on the development of the port and infrastructure thereon and hence, Rs. 20 charged by the GMB, if at all, can be said to be an amount received for renting of immovable property in terms of section 65(90a) of the Finance Act, 1994 which includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce. In our view, the understanding of CBEC, in ....
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.... and hence, the charges levied by GMB were in relation to the vessel or goods and were provided by GMB and hence, rightly fell under the category of port service in terms of section 65(82) of the Finance Act, 1994. In essence, the service rendered by GMB is one of grant of a licence to use the waterfront at the minor ports over which the State Government has a sovereign right. Such service, without any other attendant service for handling the vessels or goods, cannot be considered to be a port service. Such a service is akin to the service of renting of an immovable property but that has not been the case of the Revenue at any stage. Even if the taxable entry of renting of immovable property had been invoked, no tax would have been payable at least till 2010 as renting of a vacant land was expressly kept out of tax net till 2010. 9.1 Even if it is assumed that the grant of licence to use waterfront is a port service, appropriate tax on the "gross amount" actually charged by GMB for such service has already been discharged. The question whether there was any additional consideration received by GMB towards such service rendered by it has to be seen in the context of the valuat....
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.... paid back to GMB either as "deduction from account" or "credit note" or "debit note" or by book adjustment. The question of such deduction from account or issue of credit note, debit note or book adjustment would have arisen, if the capital investments made by the user industry were investments made on behalf of or on account of GMB. If that had been the case, the amounts spent by the user industry would have been shown as amount receivable from GMB not only in the user industry's books but also in GMB's books. The agreement between GMB and the user industry makes it clear that all and any expenditure incurred by the user industry for development of waterfront will not be the liability of GMB and therefore will not be remissible by GMB under any circumstances. This is the essence of the agreement between the two parties. This being the case, the question of such capital expenditure being adjusted or deducted would not arise. The reason why GMB was still required to know the extent of capital investment made was to ascertain and/or work out the period for which the rebate would continue to be available to the user industry. Therefore, it can be said that the tracking of the....
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....construction", the next logical question that will arise is whether the entirety of such construction is liable to be included in the value. As per the understanding between GMB and its user industry, the infrastructure developed by the user industry goes into the possession and exclusive control of GMB even after the expiry of 20 years or thereabout. Significantly, the agreement between GMB and the user industry does not require or stipulate the user industry to construct the infrastructure of such quality and type which can last beyond the concession period of 20 years or so. The agreement between GMB and the user industry does not require the user industry to ensure that the facilities and infrastructure so created are of such quality that they outlive the concession period so as to become usable for GMB at a later date. Therefore, if the user industry decides to construct a temporary jetty or a ro-ro jetty or an SPM whose shelf life is less than 20 years, the benefit that would accrue to GMB at the end of concession period would be nil as the facilities would have become unusable by that time. This itself shows that the understanding between GMB and the user industry did not co....