TaxTMI 
TaxTMI 
TaxTMI 
2014 (11) TMI 991
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....age charges normally payable for such goods handled by the Port. Consequent to the agreement, the respondent raised invoice for compensation on ONGC along with Service Tax during the relevant period but the ONGC refused to pay Service Tax part on compensation charges on the premise that no Service Tax is payable on the said compensation. The Revenue is of the view that the compensation received by the respondent from ONGC is taxable under the category of Port Services. As the laying of pipeline is equivalent to erecting wharf therefore a show cause notice dated 17-10-2006 was issued covering the period 16-7-2001 to 31-3-2006 for demanding the Service Tax along with interest and proposal for penalties were also made. The adjudicating authority considered the submissions made by the respondent and dropped the show cause notice. Aggrieved from the said order, Revenue is in appeal before us. 3. The learned Special Counsel appearing on behalf of the Revenue submits that laying of pipeline is covered as wharf as per Section 2(za) of the Major Port Trusts Act, 1963 which makes it clear that even if any part of the port is used for loading or unloading goods, it is to be considered a....
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....g any facility of the respondent, hence ONGC is not liable to any wharfage. Chairperson of the respondent has however stated that laying of pipeline would amount to erecting a wharf within the limits of port and the respondent is legally entitled to charge wharfage from ONGC and the said contention was upheld in the meeting. 5. It is further submitted that the respondents are regularly raising invoices to ONGC for payment of Service Tax in respect of oil transported through these pipelines and had paid Service Tax for the period 2011 onwards. 6. He further submitted that in the show cause notice demand has been raised by invoking the extended period of limitation on the ground that the respondent has not shown the amount received from ONGC as wharfage in their ST-3 returns for the period March, 2005 to September, 2005 and initially the payment of was under dispute and after Inter-Ministerial meeting held the contention of the respondent was upheld and ONGC started paying Service Tax and also paid arrears for the past period. Therefore, the extended period is rightly invoked. In these circumstances, he prayed that the impugned order be set aside and the appeal be allowed....
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.... paid towards any service rendered by the respondent towards the pipeline or the goods going through the pipeline and the amount paid for providing permission to ONGC to lay their pipelines through the port limits. If such permission would not have been granted, ONGC would have had to pass the pipeline through private land increasing the cost of the land and the pipeline. Therefore, the payments were made for the permissions and not to receive any port service from the respondent. 15. As per Section 2(za) of the Major Port Trusts Act, 1963, wharf may include any wall or stage and any part of the land or foreshore that may be used for loading or unloading goods, or for embarkation or disembarkation of passengers and any wall enclosing or adjoining the same. 16. Section 2(g) deals with the term "foreshore", in relation to a port, means the area between the high-water mark and the low-water mark relating to that port. 17. From the above, it is very clear that 'wharf' means to provide for walls and stage on land or foreshore, which is defined as the area between the high and low-water mark. It means that what is a structure that is on the land to allow for the vessels....
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....For any other charge not mentioned above, the Commissioner may decide the inclusion/exclusion in the value of taxable service on merits. 19. We further find that the learned Special Counsel for the Revenue emphasized that as per the Inter-Ministerial meeting held in 2004 it was held that the compensation shall be 50% of the service charges and he mainly stressed that when 50% of wharfage charges are being paid therefore, same amounts to port service. The term wharf charges has been considered to calculate the amount of compensation payable by the ONGC. We further find that the learned Commissioner in the impugned order has considered and noted in Paras 18 and 19 as under : "18. From the above definition, it is apparent that in order to fall within the ambit of Port Services, the Port or other person authorized by the Port should render the services in relation to a vessel or goods. Here in the instant case, the noticee has received compensation from ONGC for not utilized the services provided by the Port Trust. In this case, I observe that the crude oil is passed through the pipeline, which was laid by ONGC and maintained at their own cost and as such, the ownership of ....
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....SCN is time-barred and the liability of Service Tax, interest and penalty are not sustainable. 23. From the above discussion, we do agree with the observation of the learned Commissioner holding that the laying of pipelines and payments made by ONGC to the respondent for granting permission to laying pipelines does not cover under the category of 'port service'. In these terms we do not find any infirmity in the impugned order. The respondent succeeds both on merits and limitation. Therefore, the impugned order is upheld and the appeal filed by Revenue is dismissed. (Pronounced in Court on 14-11-2014) 24. [Per : P.S. Pruthi, Member (T)]. - While I do agree with my ld. Brother, I would like to expand on the reasoning, as I understand the issue. 25. Port Service is defined as any service rendered by a port or other port or any other person in relation to a vessel or goods. The issue is whether giving permission to take a pipeline under land/sea in the port area amounts to a service named as Port Service. To determine this, both sides have examined the word 'wharfage'. This word is being examined because Section 2(za) of the Major Port Trusts Act, 1963 clarifies tha....