TaxTMI 
TaxTMI 
2007 (11) TMI 75
X X X X Extracts X X X X
X X X X Extracts X X X X
....how cause notice was issued to the appellant demanding the service tax and also proposing for imposition of penalty on them. Appellant contested the said show cause notice on the ground that they are registered as a minor port with the authorities and as such are providers of the port services and are not rendering any services of storage and warehouse. The said contentions were not accepted by the adjudicating authority and the demand of service tax was confirmed and penalties were imposed. On an appeal the learned Commissioner (Appeals) concurred with the findings of the adjudicating authority. The appellants being aggrieved by such order are in appeal. 3. The learned advocate appearing for the appellant submits that the impugned order is not correct. It is his submission that the services provided by the appellant in this case will not fall under the category of Storage and ware housing services for the reason that the appellant is registered as minor port and started operation in the month of January 2001. It is the submission that the appellant has always projected themselves as minor port and the incidental storing and warehousing of the imported goods and/or goods to be e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ndings of the learned Commissioner (Appeals). 5. Considered the submissions made by both sides at length and perused the records. The issue involved in this case is whether the services of storage of the goods by the appellant in their facility would get covered during the relevant period under the category of 'Storage and Warehousing' or would be excluded from the said category. In order to appreciate the rival claims it is necessary to look into the definition of both the categories: "port service means and service rendered by a port or other port or any person authorized by such port or other port in any manner, in relation to a vessel or goods" "storage and warehousing includes storage and warehousing services for goods including liquids and gases but does not include any service pro vided for storage of agricultural produce or any service provided by a cold storage" 6. It can be noticed from the above reproduced definitions that the services provided by both the categories are different and could not be said to be overlapping each other. The service rendered by a port is distinctly different than that is provided by the storage and warehousing services. It ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction of the Central Government, authorize any person to perform any of the services mentioned in sub-section (1) on such terms and conditions as may be agreed upon. (3A) Without prejudice to the provisions of sub-section (3), a Board may, with the previous approval of the Central Government, enter into any agreement or other arrangement (whether by way of partnership, joint venture or in any other manner) with, any body corporate or any other person to perform any of the services and functions assigned to the Board under this Act on such terms and conditions as may be agreed upon. (4) No person authorized under sub-section (3) shall charge or re cover for such service any sum in excess of the amount specified by the Authority, by notification in the Official Gazette. (5) Any such person shall, if so required by the owner, perform in respect of goods any Of the said services and for that purpose take charge of the goods and give a receipt in such form as the Board may specify. (6) The responsibility of any such person for the loss, destruction or deterioration of goods of which he has taken charge shall, subject to the other provisions of this Act, be that of a bailee u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....contract, the ratio that there cannot be a vivisection of a composite activity for the purpose of taxing will be applicable in this case, inasmuch, that in this case appellant has always projected themselves as provider of port services and the activity of the storage of the goods were in synchronization of the said port services and that cannot be vivisected for taxing under the category of storage and warehousing services also further on face of the fact that the services as provided by the appellant were covered subsequently from July 2003 under the category of port ser vices. This view of ours is also fortified from the clarification issued by the Revenue vide its letter dated 1st August 2002 wherein it was clarified as under: "3. Storage and warehousing service for all kind of goods are pro vided by public warehouses, private warehouses, by agencies such as the Central Ware F-lousing Corporation, Air Port Authorities, Railways, Inland Container Depots, Container Freight Stations, storage go down and tankers operated by private individuals etc. The storage and warehousing service provider normally make arrangement for space to keep the goods, loading, unloading and stacking ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nbsp; (M.V. Ravindran) Member (T)  ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gality about the same. Warehousing and storage as a service was taxable w.e.f. 16-8-2002. The appellant who are a minor port and who undertook storage operation from January, 2001 were held to be liable to pay service tax for storing and warehousing from July, 2001 and thereafter from July, 2003 all services including the storage and warehousing services were taxed as port services. 16. By nature, port services are a combination of several services. Some meant for the vessels and some for several port users like importers/exporters or coastal traders. The charges levied by them are also under various heads like Birthlire, Anchorage, Pilotage, Mooring etc. in respect of vessels. Storage rentals are charged based on quantity and duration of storage. 17. The storage capacity of the appellant is to the tune of about 2.5 cub. Meters. The capacity is much more than what is required for the purpose of transit storage. In fact it has been admitted that the imported goods are stored sometime for several months before eventually cleared to the domestic market. Storing for such a long time cannot be treated as for incidental purposes. The charges are collected based on the actual durati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ves to be remanded for re-quantifying the duty taking into account the above aspects and reconsider whether penalty requires to be imposed and if so the quantum of penalty to be imposed. Sd/ ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....; Sd!- (M. Veeraiyan)  ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ith the duration of the quantity stored and not in accordance with the quantity handled irrespective of the period of duration. (iii) The appellants has acted as storage and warehousing keeper. (iv) The appellants are charging as separate amount for providing the storage and warehousing service. A.2 The appellants submit that the above said finding of Hon'ble Member (Technical) is factually incorrect. It is submitted appellants set up the port in accordance with the policy frame of Gujarat and Gujarat Maritime Board. The port was set up to cater the needs of the promoter companies. In this regard, a detailed feasibility study has been undertaken by the Engineers India Limited wherein it was directed that the port should have the storage facility for handling 1.8 million metric ton quantity of goods in a year. (As per Detailed Project Report prepared by Engineers India Limited) and accordingly the port was set up to handle 1.75 Million metric ton per annum quantity of the goods (As per Agreement for Storage, Handling & Evacuation of Liquid Chemical Products with Promoter Users). Hence, the finding of the Hon'ble Member (Technical) that the appellants have set up exc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch services were provided in order to provide the port service. Merely because separate amount was charged, it does not mean independent services were provided to the customers." Before going to the merits of the case, I have examined the above grievance of the appellant vis-a-vis relevant record. It is on record that as per the project report prepared by the Engineers (India) Ltd. and the agreement for storage handling and evacuation liquid chemical products with promoters, the total capacity in Phase-I was for handling 1.8 million tonne per annum of liquid chemical. Similarly, I have examined the invoices raised by the appellant which are for the quantity of the goods and are not relatable to the period for which such goods are kept in the tank. It is also correct that the appellant was rendering such ser vices only to port users in respect of imported and exported goods and such ser vices were not available to any other person with the sole purpose of 'storage and warehousing'. I agree with the learned advocate that the observations made by the learned Member (Technical) that the capacity for storage was much more than what is required for transit, storage and charges....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee with the learned advocate that no port can practically operate as a port without having the storage facility. In as much as the port in question was a specialized port, set up with the stated objective of handling the bulk liquid cargo, the same cannot be imagined without having storage facility. The storage tank were an essential, integral and, in fact, the core of the port and it is in-conceivable for port of such a nature to exist and operate without having these tanks, which are located within the area notified as a port. As I have already ob served that such storage facilities were part of the project report and was a basic requirement of the same. It cannot be said that such storing and warehousing was an additional job being done by the appellant. The same was an integral part of the port service and cannot be held separately liable to tax as storing and warehousing service. 28. I may here examine the scope of storage and warehousing services. The relevant sections are reproduced below for better appreciation. "(102) "Storage and warehousing" includes storage and warehousing services for goods including liquids and gases but does not include any service provided for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alt with separately) is broadly covered by the expression "exhibiting" or "displaying" of advertisement, but when viewed in the context, would not convert BCCI into an advertising agency. If literal meaning is applied to the definition, the same may lead to absurd results in as much as the cinema hall flashing an advertisement or the newspaper/magazine publishing an advertisement will be come an advertising agency on account of display or exhibiting the advertisement. The appellants are admittedly known as port, are registered as ports and were floated by its promoter as ports, they cannot be held to be storage and warehousing keeper. 30. I may here refer to the various circulars of Board relied upon by the appellant which are relevant for the purposes of understanding the dispute. CBEC vide Circular No. B/II/I/2002-TRU (sic) (B11/l/2002-TRU) dt. 1-8-2002 has clarified that the storage and warehousing facility provided in the port premises will be covered under the port service and not under storage and warehousing service. The relevant extract is as under "3. Storage and warehousing service for all kinds of goods are provided by public warehouses, private warehouses, b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for security of goods, stacking, loading/unloading of goods in the storage area." 31. The above clarifications issued by the Board leads to inevitable conclusion that incidental storage facility provided by the port would be covered by the definition of port service and not by storage and warehousing service. The circular dt. 1-8-02 also provides that the essential test for taxing the service under storage and warehousing is as to whether the premises are given simply on rent or security of the goods is also provided. The terms of agreement entered by the appellant with its promoter clearly laid down that user shall use facility at users own risk and shall take proper insurance cover for the product brought for storage. As such, it comes out clearly from the record that the appellant is not pro viding any security cover to the stored goods. The security of the goods has been made an integral part of the storage service as clarified by the Board in the above referred circular. Tribunal in the case of Finolex Industries Ltd. - 2007 (7) S.T.R. 408, has held that mere renting of storage tanker is not covered under the storage and warehousing services. 32. 1 also agree with the le....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Directive that every supply of service must normally be regarded as distinct and independent and, secondly, that a supply which comprises a single service from an economic point of view should not be artificially split, so as not to distort the functioning of the VAT system, the essential features of the transaction must be ascertained in order to determine whether the taxable person is supplying the customer, being a typical consumer, with several distinct principal services or with a single service. "30. There is a single supply in particular in cases where one or more elements are to be regarded as constituting the principal service, whilst one or more elements are to be regarded, by contrast, as ancillary services which share the tax treatment of the principal service. A service must be regarded as ancillary to a principal service if it does not constitute for customers an aim in itself, but a means of better enjoying the principal service supplied." The law laid down in this case was again followed by the House of Lords in case of College of Estate Management v. Her Majesty's Commissioners of Customs and Excise reported in 2005 UKHL 62, wherein House of Lords held t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r advertisement and sponsorship services" stands created for the purposes of service tax w.e.f. 1-5-06. However, the taxable services in relation to sponsorship services specifically excluded sponsorship of sport events. As such, we find that a subsequent entry having been enacted covering the activity without any change of the existing entry, has to be interpreted as if the earlier existing entry did not cover the subsequently created entry. If the subsequent entry was covered by the earlier entry, there was no reason or scope to create the present entry especially when the rate of tax in respect of both the entries remains unchanged. Certainly, creation of new entries was not by way of bifurcation of the earlier entry in as much as the earlier entry relating to advertisement remains tin- changed without any change in the tax rate. As such, the introduction of new tariff entry do imply that the coverage in the new tariff for the pur poses of tax was an area not covered by the earlier entry. It was so held in case of Glaxo Smithkline Pharmaceutical Ltd. reported in 2005 (188) E.L.T 171 (Tri - Mumbai) = 2005-TIOL-688-CESTAT-Mum as also in case of Zee Tele films Ltd. & MIs. Star Indi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t from the Tribunal decision in Glaxo Smithkline Pharmaceuticals." Zee Telefilm Ltd. v. CCE, 2006 (4) S.T.R. 349: "(f) Finance Bill, 2006 has proposed to insert a new heading of taxable service 'sale of space or time for advertisement service, excluding sale of space for advertisement in print media and sale of time slots by a broadcasting agency or organization'. The new levy, clause, excludes broadcasting agency or organization, since it is already taxed separately. This demon strates the activity of selling of space or time for advertisement service, was never considered as service included under 'advertising agency'." 35. All the above decisions, on which reliance is made by the appellant, clearly shows that if a particular service has been made liable to service tax with effect from a particular date, without any change in the definition of earlier categories, it cannot be held that the newly entered service was covered under any pre-existing service category. The appellants were registered w.e.f. 1-7-03 and they also started paying tax as minor port with effect from that date. The definition of storage and warehousing keeper did not underwent any chan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sp; (Archana Wadhwa) Member (J) FINAL ORDER In view of the majority decision, the impugned order is set aside and appeal allowed with conseq....