TaxTMI 
TaxTMI 
2024 (7) TMI 689
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....ies in the name of their principles namely M/s. Balaji Shipping (UK) Limited, Gandhidham. 1.1. The department during the preliminary inquiry at the time of the audit noticed that there was no separate account in the name of their principals namely M/s. Balaji Shipping (UK) Limited, Gandhidham and as per the agreement dated 19.02.2002, the appellant being the agent of the principal is maintaining all the books of account in its own name. The departmental audit has observed that the appellant had collected " Terminal Handling Charges" from their clients, however, they have not discharged any Service Tax on such charges during the period from 01.10.2004 to 03.07.2006. The department has entertained a view that the services provided by them fall under the category of "Port Service". A Show cause notice dated 16.04.2010 came to be issued to the appellant asking them to pay Service Tax of Rs.14,50,862/- under proviso to Section 73(1) of the Finance Act, 1994. The show cause notice has also invoked the provisions of demanding interest under Section 75 of the Finance Act and Penal provisions under Section 76, Section 77 and Section 78 of the Finance Act, 1994. 1.2. The original Adjud....
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....ce to any person by other port or any person authorized by that port in relation to port services in any manner." 2.6. It has further been mentioned by the learned Advocate that above definition of port services was amended subsequently by the Finance Act, 2010 where under the condition that service provider should be authorized by the port has been dispensed with. He has pointed out that since the disputed demand period is prior to Finance Act, 2010. The definition as existing before amendment has to be adhere to. 2.7. The learned Advocate has relied upon this Tribunal decision in case of Velaji P & Sons reported under 2007 (8) STR 236 (Tribunal- Ahmedabad). Wherein it has been held for a service to fall under the category of port service the person who is rendering the service in port area has to be port itself or any other person authorized by the port. The learned Advocate has submitted that the above decision of the Tribunal in case of u/s Velaji P & Sons (Supra) has been confirmed by Hon'ble Apex Court as reported in 2009 (13) STR J 31 (SC). 2.8. The learned Advocate has also cited Supreme Court decision in case of Konkan Marine Agencies reported 2023 (69 )GSTL 114 (....
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....pot, Container Freight Stations. This is only an illustrative list. There are several other firms that are engaged in the business of cargo handling services." 2.11. The learned Advocate has submitted that from the definition of cargo handling services as define under Section 65 (23) of the Finance Act, 1994 and the clarification issued by the CBIC. It is clear that the terminal handling charges are nothing but container handling and specifically covered under the category of cargo handling services and therefore, same is not classifiable under category of port service. 2.12. The learned Advocate has further stated that after 04.07.2006. The appellant has been discharging the service tax liability on the same charges under taxable category of business support services and revenue authorities has accepted the same and therefore, it is presumed that activities before 04.07.2006 was not falling under any taxable category of the service. 2.13. It has further been stated by the learned Advocate that since no element of fraud, mis-statement or mis-representation within intend to evade Service Tax is present in this case and therefore, confirmation of Service Tax by invoking exte....
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..... Now, coming to whether the activity undertaken by the appellant falls under the category of Port Service or not. It is clear that the containers in the port area has been handled by the concerned port authority for example M/s. Mundra International Cargo Terminal which itself prove that the appellant is not authorized person by the port to handle the cargo in the port area. The definition of the port service as provided before Finance Act, 2010 is reproduced here below :- "Section 65(105)(zn) to any person , by a port or any person authorized by the port, in relation to port service in any manner" As it can be seen from the above definition that it is imperative that port service has to be within port by port authorities or by any person authorized by the port. Since, it is very apparent from the record of the appeal that the appellant was not authorized person within port area, the activity undertaken by them does not fall under the category of port service. 4.4. We also rely on the decision of this Tribunal on this issue in case of M/s. Velaji P & Sons Pvt Ltd V/s. CCE reported under 2007 (8) STR 236 (T) :- 6. After carefully considering the submissions ....
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.... cannot charge any excess payments than the amount specified in the tariff authority for Major Ports, by Notification in the Official Gazette. The licenses issued to the appellant are not governed by the statutory requirement of Section 42 inasmuch as the appellant is free to charge any amount from its customers for the services being provided by it and such collections are not regulated by the Port. In this view of the matter, the licence given to the appellant cannot be held to an authorization. 8. Licence means 'a permission given for specific purpose, the licence holder cannot be interpreted as having the powers or authority of the person issuing the licence, unless the licence specifically mentions about it. To take a simple analogy the person issued with diving licence, under no stretch of imagination, can be said to be functioning as Road Transport Authority. Authorization may be issued by way of licence, but not all licences are authorizations. Hence, the licences issued by Ports to various agencies (under Sec. 123 of MPTA) should not be confused with the authorization (may be by way of licence) issued under Section 42 of MPTA". The difference between authoriza....
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....ases are that the appellants herein were holders of Stevedoring Licence and in few cases were also rendering the activity of handling shipment of iron ore, granite blocks, aluminium, etc. within the port area of Mangalore Port and Karwar Port. It is also undisputed that the appellants herein had taken the Service Tax registration under the category of CHA or Steamer Agent or C&F Agents. It is also undisputed that the appellants are discharging their Service Tax liability under the category of CHA on 15% of the gross value of the bills raised by them for the services rendered to their customers. Revenue's contention is that the entire amount, which is collected by the appellants from their customers, should be taxed under 'Port Services'. The adjudicating authority, while coming to the conclusion that the appellants herein had rendered the 'Port services', as in almost all cases, recorded the following findings : "27. The issue relates to classification of services rendered under 'port services' and demand of differential duty. The contention of the service provider is that they are rendering services as Custom House Agent (CHA) and paying service tax under the said categor....
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....the "service authorized". 30. In the above mentioned clarification even though Management Committee at Paradeep Port is not authorized by the port for rendering its services within the port, yet it was considered by the Board that as long as the contractors utilized by Management Committee for rendering their services are issued licenses or permits by the Paradeep port, it should be treated as authorized by the Port Trust for rendering services in relation to vessels and goods within the port area. On the same analogy, since the service provider are issued with stevedore licence by the NMPT to operate within the port area it cannot therefore be said that they are not authorized by the NMPT for rendering services in relation to vessels and goods within the port area. Port service is expected to be provided by the port or by person authorized by port in any manner. Instead of performing all the services by themselves, port has preferred to perform certain services and permitted/authorized to do the remaining services by stevedore. For example, Section 42 of the Major Port Trust Act, 1963 specify performance of service by Board or other person. Section 42(1) says that a Board....
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....wer to undertake the services, which they can licence to somebody else. At the outset, we may record that an identical issue arose as regards the assessee having a stevedoring licence and his operations were sought to be brought under the category of 'Port services' by the revenue authorities in the case of Konkan Marine Agencies. Aggrieved by such an order, the appellants preferred an appeal before the Tribunal in appeal No. ST/75/2007, which was disposed of by Final Order No. 884/2007, dated 6-8-2007 as reported at 2007 (8) S.T.R. 472 (Tri.-Bang.). While allowing the appeal filed by the assessee therein, the Bench recorded findings, which, we may respectfully reproduce : "6. We have gone through the records of the case carefully. The point at issue is whether the services rendered by the appellants amount to "Port Services" and whether they are liable to pay Service Tax in terms of the Finance Act, 1994. We find that the appellants obtained the stevedoring license from the Mangalore Port Trust for carrying out the stevedoring operations. The stevedoring operations actually mean loading and unloading of cargo within the port premises. The Commissioner has interpreted that....
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....e reproduced findings that the Bench had considered the provisions of Section 42 of the Major Port Trust Act and also the definition of the 'Port services' under Section 65 of the Finance Act, 1994 while allowing the appeal filed by asessee. Aggrieved by such an order, Revenue preferred an appeal to the Hon'ble High Court of Karnataka in C.E. Appeal No. 12 of 2008, which was decided by a judgment dated 13-3-2008, which is reported at 2009 (13) S.T.R. 7 (Kar.). In the said judgment, their lordships have recorded the following findings, from which we respectfully reproduce relevant paragraphs : "15. We may further clarify that the definition of "port service" as found in Section 65(82) of the Finance Act would not be applicable to the facts of the present case. The definition of "port service" reads as under : "Port Service" means any service rendered by a port or other port or any person authorised by such port or other port, in any manner, in relation to a vessel or goods." 16. According to the learned Counsel for the appellant since the assessee is a licence holder, therefore he would be the person authorized within the definition of "port service" as me....
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....l and hence would fall under the category of port services as defined under Section 65(42) of the Finance Act, 1994. While allowing the appeal filed by the assessee against an order holding that the services rendered by the assessee would fall under 'Port services', the Tribunal held as under :- 6. After carefully considering the submissions made by both the sides, we find that the issue as to what service would get covered by the port services, scope of the "port service" was examined at length by 'the Tribunal in the case of Homa Engineering Works referred supra. In para 8 of the said judgment, it has been observed that taxable services under the net of "Port Service" means any service rendered by a port or any person authorized by such port. The services being provided by the appellant are handling, stevedoring, loading, unloading, tug hire and labour arrangement. Admittedly, such services are not required to be provided by the Port under The Major Port Trusts Act, 1963. A perusal of the Section 35 of the said Act, as reproduced in the case of Homa Engineering Works, clearly shows that power of the Board to execute the works and provide appliances do not include the abo....
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....tioning as Road Transport Authority. Authorization may be issued by way of licence, but not all licences are authorizations. Hence, the licences issued by Ports to various agencies (under Sec. 123 of MPTA) should not be confused with the authorization (may be by way of licence) issued under Section 42 of MPTA". The difference between authorization under Section 42 of MPTA and a licence issued under Sec. 123 is clearly understood if the functioning of private container terminals (e.g. P & O) terminal in Navaseva in Mumbai, Visakha Container Terminal at Visakhapatnam etc.) operating in various major ports and some of the berths operated by private persons on BOT basis, is examined. In all these cases where private parties are operating container terminals of berths, the functioning is independent of the ports which has given such authorization and in all such cases they are governed by the scale of rates fixed by TAMP (refer above) under Sec. 48 by way of notifications published in the Official Gazette. Take for instance in Visakhapatnam Port, the Visakha Container Terminal Pvt. Ltd. has been authorized by Visakhapatnam Port Trust to handle the container cargo that is coming to Visak....
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....nce Act, 2010, would seeks to include all services provided entirely within airport/port premises would fall under these services i.e. 'Port services' and there is no pre-condition of any authorisation from the port authority for taxing the services. It is also seen from the Circulars issued by the Government of India, more specifically, Circular dated 26th February, 2010, the scope of modifications or expansion of definition of 'Port services' would come into effect from notified date i.e. after the enactment of the Finance Bill, 2010. The said Finance Bill was passed by the Parliament and the President gave assent to it on 8-5-2010. It would imply that the modified/altered or expanded definition of 'Port services' would definitely encompass the services rendered by the appellants herein, but from 8-5-2010. It is an admitted fact that the relevant period in all these cases is prior to 8-5-2010. Hence, the contentions raised by the counsels for all the appellants that the Finance Act, 2010, has removed the lacuna in the earlier port services, is correct. 18. Hence, in view of the foregoing reasonings, on the merits of the case whether all the services rendered by the appel....