AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (12) TMI 680
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....in the nature of consulting engineer services and works contract services etc. During the period 2012-13 to 2014-15, the Appellant among other works, provided works contract services to M/s Sarat Chatterjee & Co (VSP) Pvt Ltd (SCCPL) by way of doing construction of 'mechanised fertiliser handling and bagging facility' on the land in the backup area of 6th berth of Kakinada Seaports Limited (KSPL) at Kakinada Deepwater Port (KDWP). This backup area was leased by SCCPL to KSPL. 3. On the other hand, the Department felt that such an activity on the leased land of KDWP was not part of the port infrastructure, being situated outside the port and therefore, not eligible for exemption under S.No.14(a) of Notification No.25/2012-ST dated 20.06.2012. However, the Appellant believed that the said activity amounts to construction of Port and is exempt under S.No.14(a) of Notification No.25/2012-ST. Therefore, pursuant to enquiry and investigation by Revenue, a show cause notice dated 25/08/2018 was issued invoking extended period of limitation, as it appeared to revenue that the civil work/works contract undertaken by them is taxable and accordingly, the demand was proposed for Rs. 4,58,56,7....
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....he backup area at berth no.6 was given to SCCPL on lease/revenue sharing basis. As per agreement, the relevant covenants are as follows. Responsibilities of M/s KSPL: a. To provide design, layout of Berth No.6 and back up area for storage and warehousing. b. To provide design and layout of proposed KDWP railway infrastructure. c. To facilitate support and coordination with SCCPL consultant for establishment of Mechanized cargo handling systems. d. To provide the site for installation of mechanized cargo handling systems including access to the said site for carrying on operations. e. To provide support infrastructure such as power connectivity with adequate load, water and roads to the above infrastructure. f. To establish and provide railway connectivity. g. To provide cooperation in relation to SCCPL's marketing and promotional efforts to attract cargo. Responsibilities of M/s SCCPL: a. To design, build, procure, install and commission the mechanized fertilizer and fertilizer raw material handling systems for unloading, bagging and rail/road despatch. b. To operate and maintain the above equipment and handle cargo unloading and loading from and to ships, war....
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....accounts) of KSPL was recorded on 09/03/2017 who, inter alia, stated that Kakinada seaport is a minor port. KSPL was incorporated in the year 1998 and is operating the Kakinada deepwater port under 'build, operate, maintain, share and transfer basis' (BOMST) from the government of AP. The company provides 'port service' by providing pilotage, berthing, wharfing, open and closed storage facility, cargo evacuation facilities namely railways, roads etc. The port has been taken over from the government of AP, under 'concession agreement' on 'revenue sharing basis'. The billing is on quarterly basis and they pay accordingly. The Port area is about 300 acres and he also furnished the Port area map. Further, they have open area also outside the customs notified area, which is allotted for storage of cargo. They operate in the land handed over by the Port department, government of Andhra Pradesh. They have entered into agreement with SCCPL to install mechanized fertilizer facility in the backup area of berth No. 6, on payment of royalty charges for each ton of cargo handled. SCCPL are reimbursing land lease charges along with revenue share (from cargo handling) for the area occupied by the....
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.... of the fertilizer handling and bagging facility as an asset in their balance sheet. They have also furnished copy of fixed asset sheet along with the balance sheet for the relevant period. Agreement was entered with the Appellant - Vijay Nirman Company Ltd, for design and construction of civil works of the fertilizer handling and bagging facility covered by LOI dated 12/09/12. The contract value was Rs. 90,91,00,000/- which included all taxes except service tax and labour cess. Further, as per his understanding service tax was not applicable on the said activity being part of infrastructure development of port which is exempt as per the exemption Notification No. 25/2012 - ST. Further stated that the Appellant in the RA bills raised for the said facility mentions - service tax is not claimed in the bill on the assumption that service tax is not applicable for this project, being port infrastructure, subject to confirmation. If service tax is applicable the same will be claimed in the next bill. He also stated that the construction activity with respect to the fertilizer handling and bagging facility was completed in September 2014. Further, stated that in consultation with the GM ....
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....Appellant have suppressed and misstated the value of the said activity by not disclosing the same in the relevant portion of the ST3 returns for the period. It further appeared to Revenue that the Appellant is not entitled to the exemption under notification No. 25/2012 - ST. It further appeared that as per section 3(4) of Indian port Act 1908, port is defined as - port includes also any part of river or channel in which this Act is for the time being in force. Further, section 43 of the Indian port act defines port limits as - may include any piers, jetties, landing-places, wharves, quays, docks and other works made on behalf of the public for convenience of traffic, for safety of vessels, or for the improvement, maintenance or good governance of the port and its approaches, whether within or without high watermark, and subject to any rights of private property therein, any portions of the shore or bank within 50 yards of high watermark. 15. Accordingly, it appeared to revenue that the mechanized handling and bagging facility set up in the backup area of berth No. 6 of the port, does not seem to be part of the port, in as much as, the same does not fall under the port limits, as ....
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....h is the foundation agreement under which the Appellant have been awarded the work of construction by SCCPL. If the said agreement is read in conjunction with the agreement between Appellant and SCCPL, it is evident that the work undertaken is pertaining to port and for enhancement of port capacity with respect to fertilizer cargo at berth No. 6 and its backup area inside the port. It is evident that KSPL, who are the concessionaire duly appointed by the State government, have leased land to SCCPL in the port area, for construction of the mechanized fertilizer and FRM handling system for unloading, bagging and rail/road dispatch facility inside the port, for enhancing the port capacity with respect to fertilizer handling at berth No. 6. As the construction of the fertilizer handling and bagging facility enhances the capacity for handling fertilizers etc., at berth No. 6 of the port, therefore the said facility is very much part of the port and entitled to exemption under notification No. 25/2012. Further urges that the adjudicating authority has drawn irrational conclusions by referring to the definitions of 'port limit' under the Indian Port Act. Admittedly, the fertilizer handlin....
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....he consideration for the work undertaken and the same was payable separately to them, if applicable. Further, admittedly, Appellant have consciously not charged service tax in their bills and they further qualified the bills by mentioning that - service tax, if applicable, shall be charged separately in the subsequent bill. Thus no case of any suppression, mis-representaion, fraud etc., is made out. The issue is wholly interpretational in nature. Thus, in the circumstances extended period of limitation is not invokable. The impugned order is fit to be set aside on this ground alone. He further relies on the ruling of the Apex Court in the case of Chemphar Drugs & Liniments [1989 (40) ELT 276], wherein it was held that extended period of 5 years is invokable only when there is positive act of suppression etc., on the part of the assessee i.e., the assessee is in the knowledge of the duty liability but has deliberately withheld the information from the Department. 21. Further, the Appellant was entitled to take Cenvat credit on the inputs and input services utilized for the said construction activity. 22. Learned AR for revenue relies on the impugned order and reiterates the findin....
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....vice tax was actually charged or received and the fact that they had informed their principal that in case the service tax payable on their activity, they would charge the same separately. There is also an important aspect that the customs department had, vide letter dated 14.05.2015, permitted SCCPL to operate Mechanized fertilizer handling & bagging facility inside KDWP in the backup area at berth No.6. Therefore, the department was also aware of such activity being undertaken by SCCPL. 25. We further find that admittedly, the Appellant was registered with the service tax department. Their turnover was in crores and they have maintained proper books of accounts which were regularly audited from time to time by the department as well as the auditors of the Appellant company, as required under the provisions of the Companies Act as well as other tax laws. Further, admittedly, Appellants have regularly filed the returns (Form ST-3) with the department. Admittedly, the service tax was neither charged nor collected by the Appellant based on their understanding that service tax is not payable on such activity as the work is in respect of construction of port, which was exempt during t....