TaxTMI 
TaxTMI 
2023 (9) TMI 1720
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....nloading, Tata -Hitachi working income, Terex working income, Tug working income, dispatch money income as the income earned under these heads were liable for service tax under the category of 'Port Service'. Hence, an inquiry was initiated against the appellant. Statement of authorized signatory of the appellant was recorded. On scrutiny of the documents submitted by the appellant it was noticed that appellant have not paid Service Tax on the entire charges collected by them for various above several services. Coming to such a conclusion, that appellant was authorized by the Port authority to carry out different activities in the port area and the as per the licence granted to them by the Gujarat Maritime Board, evidencing the same, services rendered by the appellant are in relation to vessels or goods in the port area; the said services are fully covered under the taxable head port services; holding such a view a show cause notices were issued to the appellant for proposing the demand of Service Tax liability. A show cause notice dated 18.10.2010 also proposed the disallowance of Cenvat credit of Rs. 3,66,923/- availed by appellant on steel plates, H.R. Plates, angle, etc. Appell....
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....port division and equal amount were shown as income on credit side and as expenses on debit side. The same is also duly certified by the auditor cum chartered accountant who had audited books of accounts for the period 2006-07 to 2010-11. Balance amount of Rs. 35,58,148/- was towards transportation charges by Road for the services of transportation of goods by road outside the port premises e. g. from factory premises to Railway Yard, within the factory premises etc.. As per the provisions of the Finance Act. 1944 no service tax was payable on the activities of transportation of goods by road but payable on the services of goods transport agency that too under the reverse charge mechanism by the person who is liable to pay freight. (iii) Dispatch Money earning income (Rs. 1,38,15,342/-) as per admitted facts in show cause notice on Rs. 1,38,15,342/- Service tax was paid and same is appropriated while passing impugned order. Therefore, no service tax can be demanded and confirmed on such activities under the head of Port Service. 2.2 Without prejudice, he further submits that demand of Service tax on the income under the head of Barge Working income, Tata Hitachi Work....
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....Goods, since appellant was not authorized for provisions of said services and also provided outside port area so same cannot be classified under the Port Services. Value of Rs. 30,51,97,921/- stand for which there was no provision of services etc. which are comprising of Transport Division income (Rs. 16,60,87,462/-) where no service receiver nor realization of value but entries was passed in journal to ascertain volume of activities of transport division as per Chartered Accountant/ auditor's Certificate, Reimbursement of Actual Expenses paid on behalf of receiver of Service to the third party (Rs. 2,74,53,525/-), Duplicate of Entry -amount taken twice under two different head (Rs. 2,74,40,671/-) and Dispatch Money Earning - Additional amount paid by the receiver of the service for early discharge of cargo than stipulated time period (Rs. 8,42,16,263/-), since, there is no provisions of service not to speak of provisions of services within port area nor in relation to vessel or goods nor authorized for such activity same cannot be classified under Port Services. 2.6 He further argued that demand is also not maintainable on limitation. Since, demand for the period 2006-07 to 201....
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....elation to vessel or goods. Therefore, services provided by it cannot be classified under "Port Services". 2.8 He further submits that said services are classified under clause (zzzzj) of Section 65 (105) of the Finance Act, 1994 as "Supply of Tangible Goods" with effect from 16.05.2008. It is admitted facts on records that appellant had paid service tax w.e.f 16.05.2008 for provisions of such services under the category of "supply of tangible goods services" and still paying service tax under that category only. Even department has not disputed payment of service tax under the said category of "supply of tangible goods services for the period 15.05.2008 to till date. He placed reliance on decision of India National Ship Owners Association Vs. Union of India -2009(14)STR 289 (Bom) upheld by Hon'ble Apex court reported as Union of India Vs. Indian National Ship owners Association - 2011(21)STR 3 (SC). 2.9 He also argued that it was evident that service tax demanded under the impugned show cause notice for the period 2005-06 to 2008-09 was incorrectly worked out in as much as income generated through 'Supply of Tangible Goods' prior to 16.05.2008 was demanded under the head of ....
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.... under Section 65(105) of the Finance Act, 1994. Thus, it was not put to the proper notice and it is settled law that such show cause notice is liable to be set aside only on this ground. 2.12 He also submits that in the present matter it was alleged that appellant was authorized by Gujarat Maritime Board to perform services in relation to vessels within port area, thus services provided by the appellant to the vessels will fall under port services. Further department has relied upon the Circular F.No. B11/1/2002-TRU - dated 01.08.2022. Under Section 6 of the Indian Port Act, 1908 the Government of Gujarat is empowered to make Port Rules, inter alia, covering Rules for granting license for the purpose of loading/ unloading etc. and grating license for plying barges within the port limit (Harbor Craft License). The aforesaid license is given by the Gujarat Maritime Board. What was given to appellant was a license for the above purpose and not authorization by the port. It was only licensed and not authorization by the ports. In the present matter Ld. Commissioner misinterpreted the definition by holding that licence is also authorization. The licence and authorization both are di....
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....jected classification under 'Supply of Tangible goods'. The Learned Commissioner also while passing impugned order found that during the relevant period appellant was engaged in rendering of service falling under the category of 'Supply of Tangible Goods' and relying upon CBEC Circular No. 137/20/2008-CX. 4 dated 23.10.2008 dropped the demand of Cenvat Credit. It means the Ld. Commissioner while passing impugned order considered services provided subsequent to 16.05.2008 as 'Supply of Tangible Goods' whereas similar services provided prior to 16.05.2008 under 'Port Service' 2.16 He also submits that impugned show cause notice was time barred. The entire show case notice was based on audit of records for the period 2005-06 to 2009-10 carried out by Central Excise officers on 13.08.2010. The impugned notice was issued on 18.10.2010 covering period from 200506 to 2009-10 under the Proviso to Section 73(1) of the Finance Act, 1994. In the present matter non-payment of service tax, if any, was only on account of difference in bonafide interpretation and classification of services without any intention to evade tax payment. 3. Shri Rajesh Nathan, Learned Additional Commissioner (Au....
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....2 In this context, reference is made to CESTAT, Ahmedabad's decision in the case of Shreeji Shipping v. CCE, Rajkot :2014 (36) S.T.R. 569 (Tri. - Ahmd.). In the said decision it was held that the services rendered by anyone within the port would be taxed under the head of 'port services' only w.e.f. 1-7-2010, when there was amendment to the 'port services'. In CESTAT, Bangalore's decision in case of Aspinwall & Co. Ltd. - 2011 (21) S.T.R. 257 (supra). CESTAT, Bangalore also quoted the decision of Velji P. & Sons (Agencies) P. Ltd. (supra). The relevant Paras from the said decision are reproduced below: '16.1 In the case of Velji P. & Sons, the facts were: the assessee therein was rendering the services of hiring of the barges, cranes, forklifts and they were licenced by Gujarat Pipavav Port Limited to carry out such activities. Revenue was of the view that the services rendered by the appellant would relate to goods hiring vessel 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 un....
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....pecified by that Port in the Official Gazette. For such authorization if effective, the same should have prior approval of the Central Government and the person so authorized 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 (emphasis supplied). 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 driving 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....
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....ng Works v. CCE, Mumbai, Revenue has not filed any appeal in this Court. In view of this, this appeal is dismissed. No costs". 17. It can be seen from the above reproduced ratio of the judgment of the Tribunal in the case of Velji P. & Sons (Agencies) (P.) Ltd. that the facts, of that case and the facts in these cases before us are identical wherein various services were rendered by the appellants herein within the port area. Since the ratio of the judgment of the Velji P. & Sons is squarely applicable in this case, the judgment had also having been upheld by the Hon'ble Apex Court, the ratio is binding on us. It is also to be noted that the judgment of the Hon'ble Supreme Court in the case of Velji P. & Sons (supra) seems to have been accepted by the Government of India, which can be ascertained from the fact that the Government of India in Finance Act, 2010 expanded the scope of many existing services and one of them being 'Port services'. The expansion of definition of 'Port services', which has been brought into play by the Finance Act, 2010, would seek to include all services provided entirely within airport/port premises would fall under these services i.e. ....
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....axable. The Appellant can be made liable to pay tax under the category of 'Port Service' only if they are authorized by the Port to render services in relation to vessels or goods. In the present case department failed to produce any evidence by which it can be proved that the Appellant were authorized by the port for providing services at port. There is no authorization by the Port to the appellant to render the said services. Further, permissions issued by the Port authorities to the appellant cannot be considered as authorization inasmuch as the said permission issued is basically to enter into the Port area. The appellant has merely arranged the facility on behalf of the clients and importer or exporter and not on behalf of the Port. Therefore, in the present matter conclusion of Ld. Commissioner that Appellant have been authorised by the port Authorities for carrying lighterage of the cargo from the quay to the mother vessel by using barges and collect charges from customers, the said activity falls within the ambit of 'Port Service' is legally not correct and not sustainable. 4.6 We also find that the issue as to what service would get covered by the port services, scope o....
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....ers and other works within the port or port approaches or on the foreshore of the port or port approaches, with all such convenient arches, drains, landing places, stairs, fences, roads, railways, bridges, tunnels and approaches and buildings required for the residence of the employees of the Board as the Board may consider necessary; (b) buses, railways, locomotives, rolling stock, sheds, hotels, warehouses and other accommodation for passengers air goods and other appliances for carrying passengers and for conveying, receiving and storing goods landed, or to be shipped or otherwise; (c) moorings and cranes, scales and all other necessary means and appliances for loading and unloading vessels; (d) reclaiming, excavating, enclosing and raising any part of the foreshore of the port or port approaches which may be necessary for the execution of the works authorized by this Act, or otherwise for the purposes of this Act; (e) such breakwaters and other works as may be expedient for the protection of the port; (f) dredgers and other machines for cleaning, deepening and improving any portion of the port or port approaches or of the foreshore o....
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....d) receiving and delivering, transporting and booking and dispatching goods originating in the vessels in the port and intended for carriage by the neighbouring railways, or vice versa, as a railway administration under the Indian Railways Act, 1890 (9 of 1890); (e) piloting, hauling, mooring, remooring, hooking, or measuring of vessels or any other service in respect of vessels; and (f) developing and providing, subject to the previous approval of the Central Government, infrastructure facilities for ports. (2) A Board may, if so requested by the owner, take charge of the goods for the purpose of performing the service or services and shall give a receipt in such form as the Board may specify. (3) Notwithstanding anything contained in this Section, the Board may, with the previous sanction 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 ....
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....pilotage and certain other services. (1) Within any port, fees may be charged for pilotage, hauling, mooring, remooring, hooking, measuring and other services rendered to vessels, at such rates as the Authority may fix. (2) The fees now chargeable for such services shall continue to be chargeable unless and until they are altered in exercise of the power conferred by sub-section (1). (3) The Central Government may, in special cases, remit the whole or any portion of the fees chargeable under sub-section (1) or sub-section (2)'. 8. After carefully going through the submissions made by both the sides and after going through the relevant provisions of law, as extracted above, we find that taxable services under the net of "Port Service" means any service rendered by a port or any person authorized by such port. As such, the services which can be taxed under the said category have to be either services rendered by port itself or any person authorized by such port. Admittedly, repair of the vessel is not being done by the port. The lower authority has held the appellant to be a person authorized by such port to undertake the activity of repairing of v....