TaxTMI 
TaxTMI 
2026 (3) TMI 595
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....f the Finance Act, 1994 and therefore, SCN dated 24.09.2014 was issued to them proposing recovery of service tax of Rs.6,82,400/- under proviso to Section 73(1) of the Finance Act, 1994 along with interest under Section 75 and penalty under Section 77 and 78 of the said Act. 1.1 The said show cause notice was adjudicated by the Additional Commissioner vide order dated 29.01.2016 wherein, he confirmed the charges made in the show cause notice and also imposed an equal penalty on the appellant under Section 78 of the Finance Act, 1994 along with penalty of Rs.10,000/- under Section 77 of the said Act. Aggrieved with the said order, the appellant filed appeal before the Commissioner (Appeal) who vide impugned order dated 28.03.2017 upheld the order of the lower authority and rejected the appeal filed by the appellant. Hence, the present appeal before the Tribunal. 2. In their appeal, the appellant took the following grounds: - * The show cause notice issued on 24.09.2014, is an outcome of audit of their records on 22.02.2012. It demands service tax for the period 2009-10 and 2010-11 (upto June 2010) and thus, it is beyond the normal period of limitation. It has been iss....
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....nce Act, 1994 as under:- "Any 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"; Further, as per Section 65(105) (zn), the taxable services would be the services provided "to any person, by other port or any person authorized by-that port in relation to port services, in any manner". The appellant are neither a port nor other port nor authorised by port or other port and therefore, demand of service tax under the said taxable category is without authority of law. * They were under bonfide belief that they are not liable to pay any service tax as sale of water is exempt under Gujarat VAT Act, 2005 and there is no contravention of provisions of Finance Act, 1994 and accordingly, they are not liable to pay any penalty under Section 77 & 78 of the said Act. They rely on the decision in the case ICC Reality (India) Pvt. Ltd. Vs. CCE reported at 2013 (32) STR 427 (Tri-Mumbai) wherein, para 9, 10 & 11 of which are reproduced below:- "9. We have gone through the Lease Agreements. As per the terms and conditions of the Lease Agreements, the tenants have to pay ele....
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....s one of sale of water. Sale is not a taxable event to levy service tax". Learned Advocate also relied on following case laws, to plead that the present case relates to sale of water and no service is involved and hence, demand of service tax by department is not sustainable. a) Electronics Technology Parks v CCE & ST, Trivandrum-2022 (56) G.S.T.L. 182 (Tri. -Bang.) b) Kiran Gems Pvt Ltd v CCE & ST, Surat-I-2019 (25) G.S.T.L. 62 (Tr.-Ahmd.) c) Radius Water Ltd v CCE & ST, Raipur-2015 (37) S.T.R. 409 (Tri. - Del.) d) Golflinks Embassy Business Park v Commissioner of ST, Bangalore-2012 (26) S.T.R. 124 (Tri. -Bang.) 4. Countering the arguments, learned Authorised Representative mentioned that supply of fresh water would include cost of procurement of water, transportation of the same to the vessel and other costs incurred in relation to provision of service in the port. It is not the cost of water alone, it includes cost of charges of other elements. CBEC in it's Circular F No. B.11/1/2001-TRU dated 09.07.2001 has explained that water supply is taxable under the category of "Port Services". Learned AR also relied on the decision of this Tribunal ....
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.... general cargo, warehousing charges, cranage charges, ore handling charges, wharfage on petroleum products, weighment charges for lorries, traffic appliance charges, weighment charges for goods; (iii) Railway haulage charges for rail-borne goods, local haulage and storage; (iv) Container handling charges consisting of import, export and transhipment wharfage on containers, equipment charges for handling of containers, container storage charges; (v) Labour charges. 2.2 All these charges form part of taxable value of port services. Demurrage charges are recovered by port authority as a rental for storage of goods. The fact that these charges apply only if the goods overstay a prescribed free period, does not detract from their being in the nature of a charge for providing a service in relation to goods. Accordingly they would form part of taxable value. The Dock Labour Board is liable to pay service tax on the labour charges recovered by them. However, estate rentals of the port which is charged for renting of accommodation provided to outsiders and port users, lease rental for land, etc. will not be liable to service tax as these are not services ....
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....and hence, not leviable to service tax. We find that in that case, the appellant had produced copy of invoices showing purchase and sale of water and had also reported sales in their VAT returns filed with the State Government claiming exemption from VAT available on sale of water. In view of these clinching evidences, the said decision was given by the Tribunal held that since the matter involves sale and purchase of water, hence, this is not leviable to service tax. 5.4 The other decisions cited by the appellant do not directly deal with the issue in hand. The decision in the case of Electronics Technology Parks deals with service charges of water provided to residential colonies/ Government buildings which is easily distinguishable from the present case. The decision in the case of Kiran Gems Pvt Ltd relates to reimbursement of actual electricity charges from the tenants and therefore, the said ruling is also not applicable to the facts of the present case. The decision cited in the case of Radius Water Ltd. is also on different footing and therefore, the same is not applicable to the facts of the present case. 5.5 We find that this Tribunal vide Stay order in the case of ....