Customs, Excise and Gold Tribunal - Ahmedabad
Velji P. And Sons (Agencies) Pvt. Ltd. ... vs C.C.E. on 23 August, 2007
Equivalent citations: [2008]12STT148
ORDER Archana Wadhwa, Member (J)
1. The present appeals are against the impugned order of Commissioner vide which he has confirmed service tax against the appellant, who is a Customs House Agent, by treating the said services provided by him as Port services. Further, penalties stand imposed upon him. We have heard Shri S.N. Kantawala, learned Advocate appearing for the appellant and Shri Samir Chitkara, learned SDR appearing for the revenue.
2. As per the facts on records, the appellant herein is engaged in the activities of Customs House Agent services and holds a valid licence from the Customs under the provisions of Customs House Agent Licensing Regulations, 1984. The said services were made liable to service tax with effect from 1997. The appellant accordingly got itself registered with the Service Tax Department and started paying tax under the cover of Customs House Agent services. Due RT-12 returns were also filed by him.
3. However, as a result of certain investigations conducted by the revenue, they were issued a show cause notice dated 15th July, 2005 proposing service tax for the period July 2003 to January 2005 on the allegation that services provided by the appellant come under the net of "Port Services" with effect from 1.7.2003. As such, they are liable to pay tax as port service. Accordingly, the notice proposed confirmation of demand of service tax of Rs. 1,10,48,727/- and imposition of personal penalty. The said notice was assailed by the appellant on merits as also on limitation. The said pleas of the appellant were not accepted by the Commissioner, who confirmed the tax of Rs. 1,01,32,837/- and imposed personal penalty of identical amount under Section 78 of the Act along with imposition of penalty of Rs. 100 per day in terms of Section 76 and penalty of Rs. 1,000/- in terms of Section 77 of the Act. The said order of the Commissioner is impugned before us.
4. The appellant has strongly contended that services being provided by them are nothing but Customs House Agent services. It has been noted in the impugned order that the services being rendered by the appellant are hiring of the barges, cranes, forklifts; the same relate to goods or vessel, they are licensed by Gujarat Pipavav Port Limited to carry out such activities. The appellant's main contention is that as per the definition of "Port Services" contained in Section 65(82) of the Act, port services are required to be rendered by Port or any other person 'authorized' (emphasis provided) by such port in relation to vessel or goods. As such, it has been contended before us that the services required to be provided by the Port are port services, for which any other person may be authorized to step into shoes of the Port. Inasmuch as the services being rendered by the appellant are not required to be rendered by the port, there is no authorization by the Port to the present appellant to render the said services. It cannot be concluded that the appellant is providing any port services. Further, licenses issued by the Port authorities to the appellant cannot be considered as authorization inasmuch as the licence issued is basically to enter into the Port area. The appellant's activities are more appropriately covered by the definition of Customs House Agents services as provided under Section 65(35) of the Finance Act. The appellant has merely arranged the facility on behalf of the importer or exporter on reimbursable basis and not on behalf of the Port. Strong reliance has been placed on the recent decision of the Tribunal in the case of M/s Homa Engineering Works v. C.C.E., Mumbai 2007 - TIOL - 769- CESTAT- Mum.
5. The impugned order has also been assailed on the point of limitation. It has been strongly contended before us that appellant is duly licensed as Customs House Agent and was paying service tax in respect of the same. With the introduction of Port services as one of the services liable to tax, a survey was conducted by the revenue, as has come out during the course of cross-examination of the various persons during adjudication. On the basis of such survey, the appellants were issued a notice on 20.6.2003 directing them to get registered as "cargo handling" services. As such, it is the appellant's case that the revenue being aware of the entire facts of the case, cannot attribute any suppression to the appellant invoking longer period of limitation.
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 Trust 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. 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 Trust 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 amounts 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 license 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 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 licenses are authorizations. Hence, the licenses issued by Ports to various agencies (under Section 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 Section 123 is clearly understood if the functioning of private container terminals (for eg. P&O) terminal in Navaseva in Mumbai, Visakha Container Terminal at Visakhapatnam etc.) operating in various major ports & 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 Section 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 Section 48 of MPTA, by way of Notification published in the Gazettes of India (which is mandatory requirement under Section 42 of MPTA). The Stevedores and other port service providers, issued with licenses 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 Section 42 of MPTA and a licence given under regulations under Section 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 Homa Engineering Works, we are of firm view that activities undertaken by the appellant does not fall under the category of Port Services.
10. As regards the limitation, we find that the services being provided by the appellant were considered by the Department in the year 2001 and opinion was formed that the same are covered by the category of Clearing & Forwarding Agent services. Accordingly, the Assistant Commissioner vide his letter dated 12.3.2001 directed the appellant to get themselves registered as Clearing & Forwarding Agents. Subsequently, a show cause notice was issued on 20.6.03 directing the appellant to get registered as cargo handling services provider. Further, it has come on record as a result of cross-examination of officers that when new services were introduced with effect from 1.7.03, a survey was conducted by them at the offices of the appellant. It has also been accepted by the officers that notices were issued to Customs House Agent directing him to register as C & F Agent, which was not followed by any show cause notice, inasmuch as, the officers were convinced that the said services provider provides services under Customs House Agent only. Cross-examination of Shri C.N. Bhatt, Superintendent conducted during the course of adjudication also revealed that he had visited the appellant premises on 10.2.2005. All these factors show that there was confusion on the part of the officers also as regards the correct scope of the services being provided by the appellant. With the introduction of new service, the activities undertaken by the appellant were examined, notices issued but not pursued. As such, we are of the view that the short-levy, if any, is not on account of a mala fide intention on the part of the appellant and no suppression or misstatement with a view to evade duty can be attributed to him. The services being introduced to levy of taxes at various point of time were overlapping in nature and introduced sufficient confusion in the field as also in the revenue. No positive act of suppression can be attributed to the appellant. As such, we are of the view that the demand is also hit as barred by limitation.
11. In view of the foregoing, we set aside the impugned orders and allow the appeals with consequential relief to the appellant.
(Pronounced in the open Court on 23.8. 2007)