TaxTMI 
TaxTMI 
TaxTMI 
2018 (11) TMI 1158
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....tuted under the Major Port Trusts Act, 1963. They are registered for payment of service tax since July, 2001 under the category of 'Port Service' defined under Section 65(82) of the Finance Act, 1994. The appellant entered into an agreement dated 28.06.1993 with the erstwhile South Eastern Railway, presently East Coast Railways (ECR). As per the terms of the agreement it was agreed that ECR will make necessary arrangement for interconnecting of Port Trust Railway System and ECR Railway System. Under this agreement, both parties have fixed interchange points and at these interchange points all inward wagons to and outward from the Port Trust Railway are interchanged between the parties. The appellant provided to the Railways under the agreement a bouquet of services, such as booking of goods, collection of freight, trafficking of goods to and from railway, maintenance of assets including railway track, shunting and placement of wagons within the port area etc. The amounts collected by way of port charges and haulage charges etc. from service recipients were remitted to the Railways on daily basis. For such services, in terms of the agreement, the appellant received lumpsum amounts r....
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....He also referred to the communication issued by Ministry of Finance, Department of Revenue (CBEC) vide Office Memorandum dated 30.10.2006, in which it was clarified that similar issue pertaining to Chennai Port Trust was adjudicated by the Commissioner of Service Tax, Chennai vide his Order No.IV/16/116/2004/STC ADJ dated 11.05.2006. He submitted that vide the above order, service tax was ordered to be paid under the category of 'Business Auxiliary Service'. iii) He further submitted that w.e.f. 01.09.2007 (after the period of the present disputes) the appellant has started recovering Terminal Charges from customers in addition to freight and started depositing service taxes on such charges. iv) With reference to the first show cause notice dated 26.10.2006, he submitted that the department was not justified in invoking extended period, since they are not in possession of any cogent evidences to prove that service tax, so demanded was not levied and paid by reason of fraud, collusion, suppression of fact etc. The appellant had entertained a bonafide belief that no service tax was payable under Port Services on Terminal Charges. As such in the light of the decision of the Hon'ble ....
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....d. 9. It is further seen that the Chennai Bench of the Tribunal had occasion to adjudicate the identical dispute in respect of Chennai Port Trust with regard to the Terminal Charges received by them from Southern Railways. This decision is reported as Chennai Port Trust vs. Commissioner of Central Excise [2017 (5) GSTL 394 (Tri.-Chennai)]. The observations of the Tribunal are reproduced below: "14.The learned Consultant, Sh. Meenakshi Sundaram has made elaborate arguments which were mainly focused on the additional grounds raised in the miscellaneous application. Under an agreement called "Working Agreement" entered into by assesse with Southern Railway, the assessee undertook the activity of transporting Cargo (both imported and exported) between the dock and the entry point of the Port. It is the Railways who directly undertake transportation from and up to this entry point. Within the Port area, the assessee undertakes the activity of unloading/loading the cargo from/to the vessel to the railway wagons. The wagons are owned by Railways. The consideration for the services for loading/unloading/transportation was collected by assessee by cheque drawn in favour of Railway. The as....
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.... - For the removal of doubts, it is hereby declared that for the purposes of this clause "information technology service" means any service in relation to designing, developing or maintaining of computer software, or computerized data processing or system networking, or any other service primarily in relation to operation of computer systems; (19) "business auxiliary service" means any service in relation to - (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) procurement of goods or services, which are inputs for the client; or (v) production of goods on behalf of the client; or (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes....
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....ustomers unless authorized by the Railways. For this reason, the issuance of railway receipts and collection of freight is definitely rendered on behalf of Railways and the remittances of the amount in Reserve Bank of India is also rendered on behalf of Railways which would make the services rendered on behalf of client. 18.From the above discussions we find that the demand of service tax under Business Auxiliary Service is correct and proper." 10. By following the detailed decision of the Tribunal, we are of the view that the activity under taken by the appellant for Railways will be appropriately classifiable under the 'Business Auxiliary Services', and liable to payment of service tax. 11. Appellant has made a case on limitation for show cause notice dated 26.10.2006 that they entertained a bonafide belief that the terminal charge collected from ECR was not liable to payment of service tax under Port Service. They have cited that they received the copy of the Railway Board's Office Memorandum dated 20.04.2005 which was addressed to the CBEC expressing the view that no service tax would be payable on Terminal Charges. They have further submitted that clarification has been iss....