Custom, Excise & Service Tax Tribunal
Shreeji Shipping Service I Ltd vs Rajkot on 12 September, 2023
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
REGIONAL BENCH-COURT NO. 3
Service Tax Appeal No. 10174 of 2013- DB
(Arising out of OIO-60-COMMR-2012 dated 16/10/2012 passed by Commissioner of Central
Excise-RAJKOT)
Shreeji Shipping Service I Ltd ........Appellant
Shreeji House
Townhall Circle,
Jamnagar, Gujarat
VERSUS
C.C.E. & S.T.-Rajkot ......Respondent
Central Excise Bhavan, Race Course Ring Road...
Income Tax Office, Rajkot, Gujarat-360001 with Service Tax Appeal No. 11274 of 2013- DB (Arising out of OIO-11/COMMR/2013 dated 31/01/2013 passed by Commissioner of Central Excise, CUSTOMS (Adjudication)-RAJKOT) Shreeji Shipping ........Appellant Shreeji House Townhall Circle, Jamnagar, Gujarat VERSUS C.C.E. & S.T.-Rajkot ......Respondent Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot, Gujarat-360001 APPEARANCE:
Shri P. D. Rachchh, Consultant for the Appellant Shri, Rajesh Nathan, Assistant Commissioner (AR) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. C L MAHAR Final Order No. 12018-12019/2023 DATE OF HEARING: 26.07.2023 DATE OF DECISION: 12.09.2023 RAMESH NAIR Appeal No. ST/10174/2013 filed by M/s. Shreeji Shipping Service I Ltd. against Order-In -Original No. 60/Commr/2013 dated 16.10.2012 and Appeal No.ST/11274/2013 filed by M/s. Shreeji Shipping against Order-in-2
ST/10174/2013-DB ST/11274/2013-DB Original No. 11/Commr/2013 dated 31.01.2013 passed by the Commissioner, Customs & Central Excise, Rajkot.
1.1 Brief facts of the case are that during the course of audit, department observed that appellant has not paid Service tax correctly in respect of Barge Working Income, General Transport Income, Lighterage and Local Transport, Stevedoring, Transport and rake handling income, loading, unloading, 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. Appellants contested the show cause notices on merits as well as on limitation. In adjudication, Ld. Commissioner rejected the contentions raised by the appellant and held that the services rendered by the appellant are classifiable under port services and appellant are liable to pay the differential Service Tax and demanded interest;
imposed equivalent penalties under various sections of the Finance Act, 1994. He dropped the demand for recovery of Cenvat credit of Rs. 3,66,923/-. Being aggrieved with the impugned orders appellant filed the present appeals before this tribunal.
2. Learned Counsel Shri P.D. Rachchh appearing on behalf of appellant submits that disputed matter is fully covered by the decision of this tribunal in their own case of appellant passed vide final order No. A/10563/2014 dated 09.04.2014. He also placed reliance on the following decisions:
3ST/10174/2013-DB ST/11274/2013-DB Commr. Of Service tax, Ahmedabad Vs. Nova Enterprises -
2015(38)STR 1012 (Tri. Ahmd.) Ashok International Vs. Commissioner of C.Ex., Visakhapatnam-II-
2016(43)STR 430 (Tri. Hyd.) HML Agencies (P) Ltd. Vs. Commissioner of C.Ex.& ST, Mangalore -
2018(12)GSTL 46 (Tri. Bang.) Airport Retail Pvt. Ltd. Vs. UOI -2014 (35)STR 659 (Dll.) 2.1 As regard the Appeal No. ST/11274/2013-DB, he submits that demand for the period 2010-11 (Upto September, 2010) is on income under only three heads viz.
(i) Stevedoring, Loading, Unloading, Transport ,Rake Handling Income (Rs. 2,33,85,503/-) out of which as per admitted facts in the show cause notice dated 18.10.2011 on Rs. 1,13,97,942/- Service tax paid and same is appropriated while passing impugned order dated 14.02.2013 and on balance amount of Rs. 1,19,88,561/- no Service tax was charged and paid as the same was towards export of goods, as per the following decisions of tribunal they are not liable for service tax on said activity.
(a) Konkan Marine Agencies Vs. Commr. Of C.Ex., Mangalore -
2007(8)STR 472 (Tri. Bang.) Upheld by Hon‟ble High Court of Karnataka - 2009 (13)STR 7 (Kar.)
(b) Western Agencies Pvt. Ltd. Vs. Commissioner of C.Ex., Chennai - 2011(22) STR 305 (Tri. -LB).
(ii) Transport Division Income (Rs. 2,96,26,839/-) out of which value of Rs. 2,60,68,691/- there was no provisions of services nor receipt of payment but same was journal entry passed so as to ascertain volume of transport 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 4 ST/10174/2013-DB ST/11274/2013-DB 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 Working income, Terex Working income, Tug Working income, Machinery Usage Income is not maintainable as it is admitted facts in the impugned matter that same were for supplying such goods on hire to customer. The appellant was not authorized for supply of such goods on hire to others. In any case such supply of goods amounts provisions of service of „Supply of Tangible Goods‟ and levy of service tax on „Supply of Tangible Goods‟ come in to effect from 16.05.2008. Apart from that by any means supply of said goods on hire was not in relation to vessel or goods nor appellant was authorized by port for supply of such goods on hire, therefore, order confirming demand on the income under the said heads considering the same as provisions of "Port Services" till 01.07.2010 is liable to be set aside as such activities do not cover by the definition of port services. Even machinery Usage Income was for supply of machinery on rent outside the port premises.
2.3 He further argued that value of services which are provided within port area was Rs. 60,15,48,607/- comprising of sea transportation (Rs. 49,45,69,678/-), Transportation of goods by road within Port Area (Rs. 3,83,92,952/-), Stevedoring, Loading/Unloading of Export Cargo (Rs. 6,85,85,977/-) on which no service tax is payable on the ground of not authorized by the Port and also was in relation to export of goods, so same cannot be classified under the Port Services.
2.4 Without prejudice, he submits that it is settled position of law that there was not levy of service tax on sea transportation- Lighterage (Rs. 49,45,69,678/-) He placed reliance on decision of Untied Shippers Ltd. Vs. 5 ST/10174/2013-DB ST/11274/2013-DB Commr. Of C.Ex., Thane -II- 2015(37)STR 1043 (Tri. -Mumbai) upheld by Hon‟ble Supreme Court 2015(39)STR J369 (SC).
2.5 He also submits that Value of Rs. 12,69,67,038/- was for supply of tangible goods on hire basis to other similar service provider for providing services to their clients for that there was no authorization from the port nor said service was in relation to vessel or goods so same cannot be classified under the port services. Further Value of Rs. 10.04,49,908/- was for the services provided outside port area and the same was comprising of transportation of goods outside the Port Area (Rs. 93,99,908/-) and Machinery Usage Charges (Rs. 10,50,000/-) for supply of machinery on Rent which amounts to Supply of Tangible 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 2010-11 (Upto Sept. 2010 ) issued on 18.10.2011 majority period of demand i.e demand for the period 2006-07 to 2009-10 is badly time barred as same was issued beyond normal period of one year as per the Section 73 of the Finance Act 1994. The impugned show cause notice is second show cause notice demanding service tax for the subsequent period under the head of "Port Service" including the amount for one year of the earlier period demand i.e. 2006-07 on which DGCEI had not raised demand. It is settled position of law that in subsequent show cause notice, extended period cannot be invoked. He placed reliance on following decisions:
6ST/10174/2013-DB ST/11274/2013-DB Nizam Sugar Factory Vs. Collector of Central Excise A.P. - 2006(197)ELT 465 (SC) ECE Industries Ltd. Vs. Commissioner of Central Excise, New Delhi - 2004 (164)ELT 236 (SC) (iii)Gujarat Ambuja Exports Ltd. Vs. Union of India - 2012 (26)STR 165 (Guj,) 2.7 As regard the appeal No. 10174/2013 filed against the Order -In-
Original No. 60/Commr/2012 dated 16.10.2012 he submits that appellant has not paid service tax amounting to Rs.69,49,866.- on income under the head of Barge Tug Working during the year 2005-06 to 2008-09 due to main reason that it had never provided any services in relation to goods or vessel but had supplied its barges to M/s Shreeji Shipping, Jamnagar and other by charging amount for providing services of ligterage i.e. to bring cargo from ship to shore by its clients. Actually, at many ports ship/vessel cannot come to jetty either due to low waters or due to bigger size of a ship and in such cases vessels are parked at Anchorage for loading /unloading of cargo. Transportation of cargo after such loading/unloading from mother vessel at anchorage, in these cases, were done with the help‟s of it‟s barges (daughter vessels) by the said M/s Sheerji Shipping and other firms to whom it had supplied barges. It had charged towards the amount in two manners from the said firms including M/s Shreeji Shipping. It had charged per MT during specific period of transportation of cargo from ship to shore, from specific mother vessels for the quantity etc. as per details mentioned in the invoices and on time chartered basis for lump sum amount for the specific period as per detail mentioned in Invoices. Thus, it had provided barges by charging amount to its clients and had not provided any services in relation 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 7 ST/10174/2013-DB ST/11274/2013-DB 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 „Port services‟ by the department, though it had been paying service tax under the appropriate head i.e „Supply of Tangible Goods Services‟ w.e.f. 16.05.2008 which was not disputed by the department. These facts can be verified from half yearly returns filed by the appellant for the period after dispute i.e 16.05.2008 onwards . In any case appellant had not provided any service in relation to vessel or goods by providing its barge/ vessel but such services in relation to vessel or goods, if any, were provided by its clients who have utilized services of tangible goods. Therefore, no service tax is payable under the category of "Port Service" for the period prior to 16.05.2008.
2.10 He also submits that for the purpose of levy of service tax under the category of "Port Service" or "Other port Service" it is pre-requisite that the services are rendered by a major port or minor port or by any person authorized by major port or other port in any manner in relation to vessel or goods. In the instant case, it is on record that appellant had provided services of supply of barge to M/s Shreeji Shipping for specific period by charging per MT of cargo transported in the barge by client and in case of M/s Laxmi Enterprises it was collected on time chartered basis by charging lump sum amount for specific period i.e per month. Therefore, same merits classifiable under "supply of tangible goods" and service tax was payable w.e.f 16.05.2008 under such category.
2.11 He also argued that the impugned show cause notice did not propose that why its activities should not be classified as "Other Port Service" under Section 65(105)(zzl) of the Finance Act, 1994 as it stood at material time. The show cause notice simply discusses provisions of finance Act 1994 viz., Section 65(105)(zn) read with Section 65(81) for „Port Services‟ and provisions of Section 65(105)(zzl) of the Finance Act, 1994 and straight way 8 ST/10174/2013-DB ST/11274/2013-DB jumped to the conclusion that barge and tug income is a Port Service rendered by them in relation to vessels and goods within the port area and thus, it appears taxable under the category of „Port Service". Though, taxable services provided at "Port" and "Other Port" are classifiable under two different clauses of Section 65(105) viz. (zn) and (zzl) respectively as it stood at the material time, show cause notice nowhere classified the services under any specific clause 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 difference. In support, he placed reliance on following judgments.
Velji P & Sons (Agency) Pvt. Ltd. Vs. C.C.Ex., Bhavnagar - 2007(8) STR 236.
Western India Shipyard Ltd. Vs. CCE& ST Goa - 2008(87)RLT 887 (CESTAT -Mum.) Commissioner of C.Ex., Mangalore Vs. Konkan Marine Agencies - 2009(13)STR 7 (Kar.) 2.13 He further submits that statutory provisions stipulate that taxable services under the category of port services means, any services rendered by a port or any person authorized by such port. Whereas appellant have provided services of "supply of tangible goods viz. Barges which are not required to be provided by the Port either under the Major Port Trust Act, 9 ST/10174/2013-DB ST/11274/2013-DB 1963 or under the Indian Ports Act, 1908. Thus, the services provided by appellant are not covered by the Port Services.
2.14 Without prejudice, he also submits that though it was not authorized by GMB to perform services in relation to vessels within port area but even if for the sake of argument it is assumed that license and authorization is same then also it has to provided any service in relation to vessels or goods within port area. Appellant had supplied barge to its clients by charging amount for certain period on time chartered basis and the clients had used such barges for providing services in relation to vessel and goods by transporting cargo from ship to shore within port area to their clients. Thus, supply of barge to clients by any means cannot be considered as provision of service in relation to vessel and goods that too within port area.
2.15 He also submits that show cause notice alleged that appellant had not paid service tax of Rs. 40,788/- on value of 3,96,000/- under the category of „Supply of Tangible Goods „ against services rendered under invoice no. 110 and 111 both dated 10.10.2009. Though the over slightly payment of service tax on said two invoices were remained unpaid and the same was paid alongwith interest. The Ld. Commissioner while passing order simply found that since amount alongwith interest has been paid, therefore, he treated this issue as settled. In other words the Ld. Commissioner for similar services with same description in the invoice provided during the period subsequent to 16.05.2008 i.e. 05.05.09 to 07.05.09 and 08.05.09 to 09.05.09 considered as „Supply of Tangible Goods‟ but for the reason best known to him he rejected 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.
10ST/10174/2013-DB ST/11274/2013-DB The impugned notice was issued on 18.10.2010 covering period from 2005- 06 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 (Authorized Representative), appearing on behalf of revenue opposed the contention of the Ld. Counsel and reiterated the findings of impugned orders. He also placed reliance on the decision 2019 (27) G.S.T.L. 363 (Tri. - Hyd.) - Cairn Energy India Pvt. Ltd. v. CCE, Visakhapatnam-II.
4. We have carefully considered the submissions made by both the sides and perused the records. The issue to be decided in the present appeals is whether the barge activity carried out by the Appellant and income shown under the head of Barge working Income, General Transport Income, Lighterate and local Transport income, Stevedoring, Loading, Unloading, Transport and Rake Handling Income, Tata -Hitachi Working Income, Terex Working Income, Tug working income, Rack Transport Income, Shiip Shore Ship and Local Transport Income, Transport Division Income, Dispatch Money Income, Machinery usage income, etc. are taxable under port services or otherwise.
4.1 In this regard, it is necessary to go through the definition of "Port Service" provided in Finance Act. We find that, the definition of „port services‟ before the amendment made by the Finance Act, 2010 (14 of 2010), dated 8-5-2010 (made effective from 1-7-2010) as given in the Section 65(82) was 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'.
After the said amendment made by the Finance Act, 2010, dated 8-5-2010 (made effective from 1-7-2010), the definition of 'port service' in Section 65(82) is :
'"Port Service" means any service rendered within a port or other port, in any manner.' 11 ST/10174/2013-DB ST/11274/2013-DB From above definitions of „Port Service‟ before the amendment of 1-7-2010 and after the said amendment of 1-7-2010, we find that prior to 1-7-2010 focus/emphasis was on any service rendered by a port or other port or any person authorised by said port or other port. But in the definition of „Port Service‟ after the amendment of 1-7-2010, the focus/emphasis is on any service rendered within a port or other port. Thus prior to the amendment of 1-7-2010 each and every service rendered within a port or other port cannot be covered by the category of „Port Service‟ unless it was specially rendered by such Port (a port or other port) or by a person „authorised by such Port or other Port.
4.2 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 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 : 2006 (1) S.T.R. 19 (Tribunal) (citation supplied) 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 12 ST/10174/2013-DB ST/11274/2013-DB 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 above activities being undertaken by the appellant. As such, it cannot be said that the services being provided by the appellant were covered by the Port Services. Further, the Tribunal in the above case has observed that the authorization from the Port must be in respect of the services which the port itself is required to provide as such authorization would make an assessee step into shoes of the Port. Having already observed that such services were not required by the port, any authorization by the Port cannot convert the services into port services (emphasis supplied). In any case, we find that there is no authorization by the Port to the appellant to conduct the services on his behalf. Licenses issued by the Port authorities cannot be considered as authorization. Such licenses are issued by the Port authorities to all the persons working in the Port to ensure the safety and security of the Port Area and does not confer any power or authority of the Port on the person so issued with the licence. If the licences issued by the Port are taken as authorization, then such licences issued to Stevedores, ship chandlers, labourers, repairers of the vessels etc. would also become authorized persons by the Port to render services as Port services.
7. We further note that Section 42 of the Major Port Trusts Act provides for authorization by the Board for various services specified 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 Ports to various agencies (under Sec. 123 of MPTA) should not be 13 ST/10174/2013-DB ST/11274/2013-DB 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 Visakhapatnam Port. Here the TAMP has fixed the scale of rates, under Sec. 48 of MPTA, by way of Notification published in the Gazettes of India (which is mandatory requirement under Sec. 42 of MPTA). The Stevedores and other port service providers, issued with licences by Ports, have not conferred with functional authority as seen in the case of private agencies maintaining container terminal or berths. This difference in functional freedom will bring out clearly the difference between an authorization given under Sec. 42 of MPTA and a licence given under regulations under Sec. 123 of MPTA.
9. In the light of the foregoing discussions and applying the ratio of law declared by the Tribunal in the case of HomaEngineering Works (supra), we are of firm view that activities undertaken by the appellant does not fall under the category of Port Services."
16.2 Revenue, aggrieved by such an order, preferred Civil Appeal Nos. 2429-2430 of 2008 along with an application for condonation of delay before the Hon'ble Supreme Court. Their lordships on 24-3-2008 passed the following order.
"Delay condoned.
The Tribunal, relying upon its own decision in the case of M/s. Homa Engineering Works v. CCE, Mumbai, has allowed the present appeal filed by the assessee. Against the aforesaid case in M/s. Homa Engineering 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 14 ST/10174/2013-DB ST/11274/2013-DB 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. '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 appellants would fall under the category of 'Port services' or not, we hold that the services rendered by the appellants would not fall under the category of 'Port services' (emphasis supplied). As the impugned orders are set aside on merits, there can be no case of penalty or interest in respect of this issue.' 4.3 The Hon‟ble Delhi High Court‟s decision in the case of Airport Retail Pvt. Ltd. - 2014 (35) S.T.R. 659 (Del.) (supra) wherein it was held that the respective services rendered within airport premises could not be charged service tax as „airport services‟ because the amendment made by the Finance Act, 2010 is prospective and is effective after 1-7-2010 only. The services rendered within the „Port area‟, which is subject matter of the present appeal and services rendered within „airport premises‟ are comparable. Therefore, findings and the conclusion made by Hon‟ble Delhi High Court in the said case are relevant and applicable mutatis mutandis to the present facts and subject matter of this appeal.
15ST/10174/2013-DB ST/11274/2013-DB 4.4 In view of above, in respect of the services rendered by the appellant during the relevant period, they cannot be made liable to pay service tax under the category of „port services‟.
4.5 Further under the "Port Service", service provided by a Port, other port or any person authorised by such port is taxable. 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 of the "port service" was examined at length by the Tribunal in the case of Homa Engineering Works referred 2007 (7) S.T.R. 546 (Tri. - Mumbai), (supra). The extract of said judgment is as below:
7. After considering the submissions by both the sides, we find that the disputed issue revolves around the interpretation of "Port Services" as appearing in Section 65(67) of the Finance Act and the various provisions of The Major Port Trust Act, 1963 (38 of 1963), to which our attention has been drawn to by both the sides. As such, for ready reference, we would like to reproduce the relevant Section of both the Acts :-
'Finance Act, 1994 Section 5 - In this Chapter, unless the context otherwise requires, -
(66) "port" has the meaning assigned to it clause (q) of Section 2 of the Major Port Trust Act, 1963 (38 of 1963);16
ST/10174/2013-DB ST/11274/2013-DB (67) "port service" means any service rendered by a port or any person authorized by such port, in any manner, in relation to a vessel or goods;
(81) "ship" means a sea-going vessel and includes a sailing vessel;
(90) "taxable service" means any service provided, -
(zn) to any person, by a port or any person authorized by the port, in relation to port services, in any manner;
(99) "vessel" has the meanings assigned to it in Clause (z) of Section 2 of the Major Port Trust Act, 1963 (38 of 1963).
The Major Port Trusts Act, 1963 (38 of 1963) Section 2. Definitions. - In this Act, unless the context otherwise requires, -
(q) "port" means any major port to which this Act applies within such limits as may, from time to time, be defined by the Central Government for the purposes of this Act by notification in the Official Gazette, and, until a notification is so issued, within such limits as may have been defined by the Central Government under the provisions of the Indian Ports Act;
(z) "vessel" includes anything made for the conveyance, mainly by water, of human beings or of goods and a caisson;
Section 35. - Power of Board to execute works and provide appliances.
(1) A Board may execute such works within or without the limits of the port and provide such appliances as it may deem necessary or expedient.
(2) Such works and appliances may include -
(a) wharves, quays, docks, stages, jetties, piers 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;
17ST/10174/2013-DB ST/11274/2013-DB
(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 of the port or port approaches;
(g) lighthouses, lightships, beacons, buoys, pilot boats and other appliances necessary for the safe navigation of the port and of the port approaches;
(h) vessels, tags or other boats for use within the limits of the port or beyond those limits, whether in territorial waters or otherwise, for the purpose of towing and rendering assistance to any vessel, whether entering or leaving the port or bound elsewhere, and for the purpose of saving or protecting life or property and for the purpose of landing, shipping or transshipping passengers or goods under Section 42;
(i) sinking of tube-wells, and equipment, maintenance and use of boats, barges and other appliances for the purpose of the supply of water at the port;
(j) engines and other appliances necessary for the extinguishing of fires;
(k) construction of models and plans for carrying out hydraulic studies;
(l) dry docks, slipways, boat basins and workshops to carry out repairs or overhauling of vessels, tugs, boats, machinery or other appliances.
Section 46. - Power of Board to undertake certain works.
(1) A Board may undertake to carry out on behalf of any person any works or services or any class of works or services, on such terms and conditions as may be agreed upon between the Board and the person concerned.
(2) A Board may, if it considers it necessary or expedient in the public interest so to do, lend any of its vessels or appliances or the services of any of its employees to any person for such period not exceeding three months and on such terms and conditions as may be agreed upon between the Board and the person concerned.
18ST/10174/2013-DB ST/11274/2013-DB Section 42. - Performance of service by Board or other person.
(1) A Board shall have power to undertake the following services -
(a) landing, shipping or transshipping passengers and goods between vessels in the port and the wharves, piers, quays or docks belonging to or in the possession of the Board;
(b) receiving, removing, shifting, transporting, storing or delivering goods brought within the Board's premises;
(c) carrying passengers by rail or by other means within the limits of the port or port approaches, subject to such restrictions and conditions as the Central Government, may think fit to impose;
(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 partnership, joint venture or in any other manner with, any body corporate or any other person to perform any of the services and functions assigned to the Board under this Act on such terms and conditions as may be agreed upon.
19ST/10174/2013-DB ST/11274/2013-DB (4) No person authorized under sub-section (3) shall charge or recover for such service any sum in excess of the amount specified by the Authority, by notification in the Official Gazette.
(5) Any such person shall, if so required by the owner, perform in respect of goods any of the said services and for that purpose take charge of the goods and give a receipt in such form as the Board may specify.
(6) The responsibility of any such person for the loss, destruction or deterioration of goods of which he has taken charge shall, subject to the other provisions of this Act, be that of a bailee under Sections 151, 152 and 161 of the Indian Contract Act, 1872.
(7) After any goods have been taken charge of and a receipt given for them under this section, no liability for any loss or damage which may occur to them shall attach to any person to whom a receipt has been given or to the master or owner of the vessel from which the goods have been landed or transshipped.
Section 48. - Scales of rates for services performed by Board or other person. -
(1) The Authority shall from time to time, by notification in the Official Gazette, frame a scale of rates at which, and a statement of conditions under which, any of the services specified hereunder shall be performed by a Board or any other person authorized under section 42 at or in relation to the port or port approaches -
(a) transshipping of passengers or goods between vessels in the port or port approaches;
(b) landing and shipping of passengers or goods from or to such vessels to or from any wharf, quay, jetty, pier, dock, berth, mooring, stage or erection, land or building in the possession or occupation of the Board or at any place within the limits of the port or port approaches,
(c) carnage or porterage of goods on any such place;
(d) wharfage, storage or demurrage of goods on any such place;
(e) any other service in respect of vessels, passengers or goods, (2) Different scales and conditions may be framed for different classes of goods and vessels.
Section 49A. - Fees for pilotage and certain other services.
20ST/10174/2013-DB ST/11274/2013-DB (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 vessel."
4.7 We find that the decision cited by the revenue in the matter of Cairn Energy India Pvt. Ltd. (supra) is not applicable in the present matter. In the said case the assessee rendered pilotage service in a minor port based on the authorization granted by the Port Authority. Here Appellant was not authorized by the port for rendering the activity on behalf of port. In the present matter their own case of Shreeji Shipping (supra) relied upon by Ld. Counsel is squarely applicable to the facts of the case in hand. In the said matter Tribunal held that "in the absence of an authorization having been issued in favour of the Appellant under Section 32(3), they cannot be said to be rendering any service which has been authorized by the port".
4.8 Therefore, the respective services in question rendered during the relevant period by the present appellant within the port area cannot be charged service tax under the category of „port service‟. We take support from the following decisions:
In the case of S.S. Maritime :2010 (7) S.T.R. 346 (Tri.-Bang.) and Hon‟ble Karnataka High Court‟s decision in the case of CCE, Mangalore v. S.S. Maritime : 2011 (23) S.T.R. 114 (Kar.) 21 ST/10174/2013-DB ST/11274/2013-DB South India Corporation (Agencies) Ltd. v. CCE, Visakahaptnam-I :2010 (17) S.T.R. 170 (Tri.-Bang.);
CCE, Visakhapatnam v. Chowgule Brothers Pvt. Ltd. :2010 (18) S.T.R. 164 (Tri.-Bang.); and Kin-Ship Services (India) Pvt. Ltd. v. CCE, Cochin :2008 (10) S.T.R. 331 (Tri.-Bang.).
4.9 We also find considerable force in the submission of the appellant that a substantial portion of the demand against them is barred by limitation as the disputed matter was within knowledge of the department. It is settled position of law that demand notice issued for subsequent period cannot be issued invoking extended period as held by apex court in the matter of Nizam Sugar Factory Vs. Collector of Central Excise A.P. 2006(197)ELT 465 (SC). Therefore the demand for the extended period in the present case is not sustainable on the ground of time bar also.
5. As a result, the impugned orders confirming the demand along with interest and imposing penalties under various provisions of the Finance Act, 1994 are hereby set aside and the appeals are allowed with consequential relief, if any, to the appellant.
(Pronounced in the open court on 12.09.2023) (RAMESH NAIR) MEMBER (JUDICIAL) (C L MAHAR) MEMBER (TECHNICAL) Raksha