TMI Blog2014 (4) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... ll Major Ports) as also under GMB Act, 1980, Maharashtra Maritime Board Act, Tamilnadu Maritime Board Act, and other similar Maritime Board Acts issued by various State Governments governing Minor Ports. Section 42(3) of the Major Port Trust Act, 1963 and Section 32(3) of the GMB Act, 1980 provide for an authorization from the Port for performing specified services. The said provisions further provide that the person authorized by the port shall charge or recover for the service rendered by them in accordance with the scale of rates which have been framed. There is no infirmity in referring to provisions of the GMB Act while deciphering the meaning of the expression authorized by the portused in the definition of port service under the Finance Act, 1994. It is an undisputed position that the Ports Act specifically provides for services which a Port would render and also provides for grant of an authorization in favour of a third person for rendering services. It is these services which the Finance Act seeks to tax and therefore the two statutes are with respect to the same person / thing or class of person / things and are thus pari-materia statutes. The license issued to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said services are fully covered under the taxable head port services; holding such a view a show cause notice was issued to the appellant for the payment of differential service tax liability. The said show cause notice also directed the appellant to show cause as to why interest be not demanded on such differential service tax liability and penalties be not imposed on them. Appellants contested the show cause notice on merits as well as on limitation. The adjudicating authority after granting an opportunity of personal hearing to the appellant and after considering the written submissions made by them, he rejected the contentions raised by the appellant and held that the services rendered by the appellant are classifiable under port services and are liable to pay the differential service tax and demanded interest; imposed equivalent penalties under various sections of the Finance Act, 1994. 3. Ld. Counsel appearing on behalf of the appellant after taking us through the Order-in-original, made submissions which are summarized as under: He would draw our attention to the definition of port services and submit that to fall under the said category, a person ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is submitted that the minor ports are concerned and are covered by the State Governments who legislate the law governing and functioning of minor ports and in State of Gujarat, it is governed by Gujarat Maritime Board Act, 1981. It is his submission that the said Gujarat Maritime Board Act provides for authorization to perform services specified in the Gujarat Maritime Board Act on such terms and conditions that may be agreed upon. It is his submission that in exercise of the provisions of grant of license, Government of Gujarat has framed the Gujarat Ports (licensing of persons engaged in unloading or loading of vessels) Rules, 1969, which provide for restriction on persons to work in the business of loading or unloading of steamers except under and accordance to the terms and conditions of license issued by a licensing officer for such purpose. It is his further submissions that the terms of aforesaid rules licenses have been issued to appellant for undertaking, stevedoring and lighterage services. Hence, the said activities undertaken by the appellant in terms of a license granted to them cannot be considered as an authorization issued to them under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporated various provisions of other enactments by referential incorporation and with respect to interpreting referential incorporation, it is settled law by the Apex Court that, when a single section of an act of parliament is introduced into another act, I think it must be read in the sense in which it bore in the original act from which it is taken, and that consequently it is perfectly legitimate to refer to all the rest of the act in order to ascertain what the section meant though other sections are not incorporated in the new act. Referred Port Small Corporation Vs. Smith 1985 (10) SC 364 was relied by the Apex Court and quoted in the judgment of Surana Steel Pvt. Ltd. Vs. Dy. Commissioner of IT [1999 (4) SCC 306]. For this preposition, he would also rely upon the judgment of the Apex Court in the case of Afali Pharmaceuticals [1989 (44) ELT 613]. He would submit that w.e.f. 01.07.2010 the definition of port service and the taxable service has been amended by the Finance Act, 2010 to provide that port service would mean any service rendered within a port or other port in any manner. He would also draw our attention to the explanatory memorandum to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in so far as a second appeal is concerned, the demand therein was raised for a period overlapping with that in the first show cause notice and has also invoked extended period of limitation. It is his submission that this action of invoking extended period in the second show cause notice when an identical issue is in dispute by issuance of a show cause notice, extended period cannot be invoked. It is the submission that the allegation as to appellant had split their contract values and billed separately for stevedoring services, lighterage services and transportation within the port, so as to avoid liability to service tax on the entire consideration, is totally wrong observation in as much as, the appellant has suo moto started discharging service tax under the head of cargo handling services w.e.f. 16.08.2002 while service tax under the head of port services, for other ports, was introduced only w.e.f. 01.07.2003 and hence extended period which has been invoked is incorrect. 4. Ld. Special Counsel for the Revenue would take us through the facts of the case in appeal no.ST/473/2009-DB. After taking us though the findings recorded by the adjudicating authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oading activities was shown as Rs.4.25 Crores. * Two separate invoices were raised by Shreeji one for stevedoring, unloading and loading services and another for lighterage and local transportation services rendered within the port area. * During the aforesaid years, all these incomes were inclusive of the income generated in handling export cargo. * During the period from 1/7/2003 to 31/3/2007, which is the period covered in the present Appeals, even though Shreeji was providing a composite service involving complete handling of cargo, including bringing goods from the ships to the wharf and shifting them to the place of storage at the port, they deliberately raised separate invoices in respect of only import cargo handling and paid tax thereon. * In their case, rendering of services commences from the anchorage point, right upto the designated goods storage place in the port / jetty. While providing lighterage services, Shreeji is unloading the goods from a vessel in a lighter or barge, bringing the same to the wharf / berth of the port and unloading the same in the port area. Thus, collectively, the services rendered by Shreeji i.e. lighterage, transportation within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1908 (15 of 1908), but does not include the port defined in clause (81). * What is incorporated by reference in the aforesaid Section 65 (76) is only the definition of port in the 1908 Act. No other provisions of the 1908 Act are either borrowed or incorporated in full / part or referred to in the definition. * Following the ratio of the judgment rendered by the Apex Court in the case of Onkarlal Nandlal vs. State of Rajsathan [1986 AIR 2146], there was no need to refer to any other provision of the 1908 Act once the incorporation of the definition of other port was carried out in the definition of port service in the FA, 1994. * The observations of the Larger Bench of the Hon ble Tribunal in Paras 9.2 to 9.16 of their Order in the case of Western Agencies Pvt. Ltd. and others [2011 (220) STR 305 (T-LB)] also support this view. * Accordingly, there is no need to interpret the expression authorised in terms of any of the provisions of the 1908 Act. Without prejudice to the above stand, assuming that it is argued that Section 32 of the Gujarat Maritime Board Act, 1981, should be taken aid of to interpret the expression authorised appearing in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Port itself. Thirdly, sub-section (1) of Section 32 covers specifically, stevedoringservices. Such activities can, therefore, be provided by the port or any person authorized by it. For this purpose, a stevedore is given a licence, without which he cannot undertake such services. In the regulations framed by the Central Government (A copy of Regulations issued by the Chennai Port is at pages 29 34) a stevedoreis defined as an authorized agent for loading and unloading and stowage of cargo in any form on board the vessels in Ports. Here too, authorization and licensing convey the same meaning. It is pertinent to note here that Section 42 of MPTA, 1963 (relied upon in Veljis case) does not make a specific mention of stevedoring as against the specific provision in Section 32 of GMB Act. Fourthly, a survey of the GMB Act reveals that the expression authorisedhas been used therein to convey meanings, such as permitted, licensed, authorized to act or sign on behalf of the GMB. A typical example is that of piloting of vessels at the port. Piloting is one of the services specified in Section 32(1) of the Act. Under Section 18 of the Act, no person shall be appointed as a pilo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces rendered by the port itself or any person authorized by such port; * admittedly, repair of the vessel is not being done by the port; * Homa Engineering Works were given vendor registration for executing repair contracts; * u/s. 35(1), the port is only to provide the facility of dry dock / workshop and it is not the duty of the port to undertake repair work; * activity of ship repair work is not mentioned in section 42(e); * no rates could be specified for repair work and such rates can be only with routine services vide section 42(4); * activity is covered under maintenance / repair services Hence, it was held that Port Service was not attracted in respect of repair work done by Homa Engineering Works. [Appeal against this order is pending before the Mumbai High Court] (B) Velji P. and Sons [2007 (7) STR 236 (T)] Assessee herein was already paying STax on CHA services and the activities in question were, arranging for or hiring barges, cranes, fork lifts on behalf of the importer / exporter on reimbursement basis. The Honble Tribunal took the view that, * Section 35 of MPTA, 63 did not include the activities undertaken by Velji. * Services provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 65(23) of FA, 1994 clearly puts a bar w.r.t. imposition of tax on export activities which also includes handling of export cargo. * Definition of port services would not be applicable to the facts of the case Konkan. SLP filed against this judgment is pending before the Apex Court since 16/3/2009. IV. Several decisions followed the line taken in the aforesaid three decisions of the Tribunal and in all those cases, stevedoring and allied / ancillary activities performed in the port area were held as not covered under the category of port services. However, in the case of M/s. Western Agencies Pvt. Ltd. And others [2008 (12) STR 739 (T)], the Chennai Bench of Tribunal took the view that since in Veljis case the activities were undertaken in a minor port, reliance placed on the provisions of MPTA, 1963 was not correct. Further, the dismissal of the appeal against it by the Apex Court being not on merits, the said decision was held to be not a good precedent for the appeals before them. The Bench also noted that for the subsequent period appellants in that case had voluntarily paid STax in respect of operations, such as inter-carting and storage of goods in port area ancilla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y authorization from the Port authority for taxing the services rendered in the port, makes it clear that prior to 2010, all services provided entirely within the port, whether authorized by the port authority or not, were not covered under Port Service. VII. In this regard, reference is invited to Ministrys Explanatory note as part of Budgetary changes for 2010-2011, excerpted below; 4.1 Airport Service and Port Service: Airport Service and Port Service cover specified taxable services provided by airport, major port and minor port or persons authorized by such port. For activities like vessel repair or other maintenance work in dry docks, Service tax liability is contested on the ground that such services are not provided under authorization by port. Classification of activities rendered by various service providers inside port area has also been subject to interpretation. To provide clarity on such issues and may be, taking note of judicial decisions, all relevant services are now being amended so as to remove the requirement of authorization by the port concerned to the service provider. Unlike the pre-amended categories where services provided by port are being taxed, po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 274/2013 from the current proceedings and list the same for disposal in its due course after issuing proper notice. 7. We have considered the detailed submissions of both sides and have also perused through the written submissions. The dispute in the present case is whether i) Stevedoring services (loading / unloading of export cargo) ii) Lighterage services (sea transportation from the location where the mother vessel is anchored till the jetty and vice versa); rendered by the appellant at minor ports in Gujarat could be taxed under Section 65(105)(zzl) as port service, which has been defined in Section 65(82) to mean any services 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. 8. The term Porthas been defined under Section 65(81) of the Finance Act, 1944 to have the same meaning as in Section 2(q) of the Major Port Trusts Act, 1963. While the expression other port has been defined in Section 65(76) to mean a Portas defined in Section 3(4) of the Indian Ports Act, 1908. 9. It is the appellants contention that during the material period (prior to 01.07.2010) for being taxed unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n who has been granted a license under the first proviso to sub-section (1) of section 4 of that Act; 65(16)(b) to a subscriber, by the telegraph authority, in relation to a telephone connection; General Insurance Services Definition 65(5) general insurance business has the meaning assigned to it in clause (g) of section 3 of General Insurance Business (Nationalization) Act, 1972 (57 of 1972); Taxable Service 65(16)(c) to a policy holder, by an insurer carrying on general insurance business, in relation to general insurance business; b. Chapter V of the Finance Act, 1994, has been amended from time to time to add services such as those relating Rent-a-cab, Architect Services, Custom House Agent Services, Practicing Chartered Accountant, Practicing Cost Accountant, Practicing Company Secretary, Tour Operators, Banking and other Financial Services, Computer Network Services, Cable Operator Services, Goods Transport Operator Services, etc. The scope and ambit of these services has also been circumscribed by the relevant enactment governing the same, as can be seen from the relevant definition in the Finance Act, 1994 which are extracted herein after for ease of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untant means a person who is member of the Institute of Cost and Works Accountants of India and is holding a certificate of practice granted under the provisions of the Cost and Works Accountants Act, 1959 (23 of 1959) and includes any concern engaged in rendering services in the field of cost accountancy; Taxable Service 65(48)(t) to a client, by a practicing cost accountant in his professional capacity, in any manner; Practicing Company Secretary Definition 65(33) practicing company secretary means a person who is a member of the Institute of Company Secretaries of India and is holding a certificate of practice granted under the provisions of the Company Secretaries Act, 1980 (56 of 1980) and includes any concern engaged in rendering services in the field of company secretaryship; Taxable Service 65(48)(u) to a client, by a practicing company secretary in his professional capacity, in any manner; Banking and Other Financial Services Definition 65(9) and 65(10) (9) banking and banking company shall have the meanings assigned to them in clauses (b) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), (10) banking and other financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tra Maritime Board Act, Tamilnadu Maritime Board Act, and other similar Maritime Board Acts issued by various State Governments governing Minor Ports. Section 42(3) of the Major Port Trust Act, 1963 and Section 32(3) of the GMB Act, 1980 provide for an authorization from the Port for performing specified services. The said provisions further provide that the person authorized by the port shall charge or recover for the service rendered by them in accordance with the scale of rates which have been framed. The relevant portion of Section 42 of the Major Port Trust Act, 1963 and Section 32 of the GMB Act, 1980 is reproduced herein below for ease of reference: Section 42(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. Section 42(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. Section 32(3) Notwithstanding anything contained in this se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case under Chapter V of the Finance Act, 1994, where provisions of different Statutes are incorporated in another Statute, then for ascertaining the scope of the provisions incorporated it is permissible to refer to the present Statute from which the provisions have been incorporated. In coming to this view their Lordships have quoted with approval the view taken by Lord Blackburn in the case of Portsmouth Corp Vs. Smith, 1985 (10) AC 364, which reads as under: when a single section of an Act of Parliament is introduced into another Act, I think it must be read in the sense in which it bore in the original Act from which it is taken, and that consequently it is perfectly legitimate to refer to all the rest of that Act in order to ascertain what the section meant though other sections are not incorporated in the new act For this reason also we find that there is no infirmity in referring to provisions of the GMB Act while deciphering the meaning of the expression authorized by the portused in the definition of port service under the Finance Act, 1994. 14. The Ld. Counsel appearing for the Revenue has relied upon a three judges bench decision of the Apex Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions throw light to the meaning of the provision which have been incorporated in the subsequent Act. The relevant observations of the Honble High Court in this regards is extracted herein below for case of reference. 15. As we read the judgments cited supra, the legal position seems to us is that when the particular provision of the earlier Statute is incorporated in the subsequent Act, such provision so understood in the first Act at the time of incorporation has to be given the same meaning in the subsequent Act. It is always open for the court to refer to relevant provisions of the earlier Act from which the provision has been enacted in the subsequent Act though not specifically incorporated, if such provisions throw light to the meaning of provision which has been incorporated in the subsequent Act. In the classic and celebrated words of Lord Blackburn, it is perfectly legitimate to refer to the rest of the Act from where a single section has been incorporated in order to ascertain what the section meant, though rest of the sections have not been incorporated in the subsequent Act. When a provision is adopted in any later Act, such adoption by incorporation ordinarily and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o statutes are with respect to the same person / thing or class of person / things and are thus pari-materia statutes. We find that applying the principle of pari-materia statute also the provisions of the Acts governing ports could be read referred to while interpreting the provisions of the Finance Act with reference to port services. 17. We also find that no cognizance had been taken of the amendment made to the definition of Port service w.e.f. 01.07.2010 to provide that port service would mean any service rendered within a port or other port, in any manner. The amendments effected from 01.07.2010 are extracted herein below for the ease of reference. 65(82) Port Services means any service rendered within a port or other port, in any manner 65(105) to any person, by any other person, in relation to port services in other port, in any manner; Provided that the provisions of Section 65A shall not apply to any service when the same is rendered wholly within other port; The explanatory memorandum to the Finance Bill, 2010 explaining the said changes has clarified that the definition of port service and other port service was being amended to provide that an authoriz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rat Maritime Board Act, 1981. The said Act applies to all the Major Ports in the State of Gujarat to which the provision of the Indian Ports Act, 1908 applies. The said Act provides for establishment of a Board to be named to be called as the Gujarat Maritime Board (GMB for short) for the administration, control and management of the port. It also provides that the administration of the port would be vested in the Board. Section 32 of the said Act is of relevance and empowers the Board to authorize any person to perform the services specified therein on such terms and conditions may be agreed upon. It further provides that the person so authorized, shall not charge or recover for the services in respect of which such person has been authorized to recover any sum in excess of the amount leviable according to the scale framed under Section 37, 38 or 40 of the relevant Act. Similar provisions exist in other States also and the same provide for the port to authorize a third person to render services. Had these facts been brought to the notice of the referral bench, then perhaps the reference itself may not have been required. 19. The reliance placed by the Ld. Counsel for the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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