TMI Blog2014 (11) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... . If such permission would not have been granted, ONGC would have had to pass the pipeline through private land increasing the cost of the land and the pipeline. Therefore, the payments were made for the permissions and not to receive any port service from the respondent. Mere erection of wharfage by itself does not amount rendering a port service and wharf is the structure where the ships dock for loading and unloading of goods. - The term used as ‘wharfage’ is merely to determine the measure of the compensation and not to determine the nature of the service rendered. Laying of pipelines and payments made by ONGC to the respondent for granting permission to laying pipelines does not cover under the category of ‘port service’. In these terms we do not find any infirmity in the impugned order - Demand id also barred y limitation - Decided against Revenue. - ST/154/2008-Mum - Final Order No. A/1729/2014-WZB/C-I(CSTB) - Dated:- 14-11-2014 - Shri Ashok Jindal, Member (J) and P.S. Pruthi, Member (T) Shri V.K. Singh, Special Consultant, for the Appellant. Shri L. Badrinarayanan, Advocate, for the Respondent. ORDER Revenue is in appeal against the impugned ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the agreement entered between the respondent and ONGC it is clear that it is in the nature of providing the facility i.e. providing of land in port area for laying pipeline which is used for transport of petroleum products through these pipelines. Therefore, compensation of 50% of wharfage is for the permission for laying pipelines in port area and using it for transportation of crude oil through these pipelines and it is not for not using the respondent s facility . It is also submitted that laying of pipeline by ONGC on respondent s land is nothing but making a wharf and hence the charges collected in the guise of compensation are nothing but in the nature of wharfage and hence it is liable to pay Service Tax. He further submits that the adjudicating authority dropped the demand on the ground that crude oil passes through pipeline which was laid and maintained by ONGC at their own cost and ownership of the pipeline is with ONGC. Therefore, no service has been rendered by the respondent as far as the transportation of crude oil is concerned. Therefore, the compensation received is not liable to Service Tax under the category port service and the respondent is not receiving w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch erection/permission does not attract Service Tax under port service. 8. It is further submitted that wharfage charges is merely a measure for determining the compensation, it does not determine the nature and quality of the service rendered in question. 9. He further submits that the extended period of limitation cannot be invoked and penalties and interest are not leviable on the respondent. 10. Heard the parties and considered the submissions. 11. To determine the liability under the port service we have perused the definition of port services under Section 65(82) which is reproduced below : 65(82) : port services means any service rendered by a port or other port or any other person authorized by such port or other port, in any manner, in relation to a vessel or goods; 12. From the above definition, it is clear that the port or any other person must render the service in relation to a vessel or goods. Port services contemplates being rendered to vessels and goods arriving at the port for which various charges such as port or dock services, cargo handling and storage devices, railway haulage services and container handling charges, etc. 13. In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck for loading and unloading of goods. The Circular dated 9-7-2001 of the C.B.E. C. clarifies the situation which is extracted below : 2.1 Some of the specific charges for the services rendered in respect of port services are as follows. (i) Port and dock charges consisting of berthing and mooring charges, port dues, pilotage and towage, water supply charges, salvage and diver charges, anchorage fee; (ii) Cargo handling and storage charges consisting of wharfage for 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the noticee is not recovering wharfage charges from ONGC, but are receiving compensation , which is measured in terms of wharfage charges . Therefore, compensation received by the noticee cannot be equated to wharfage charges . Therefore, the demand raised in the show cause notice is not sustainable on this count also. 20. Therefore, it is clear from the agreement between the respondent and ONGC that the payment were made merely for permission to use port limit and not for receiving any service. The term used as wharfage is merely to determine the measure of the compensation and not to determine the nature of the service rendered. 21. In the case of Senairam Doongarmall v. CIT - 1961 (42) ITR 393 the issue before the Apex Court was whether compensation paid for loss of business should be treated as business income or income from other sources. In that case, it was held by the Hon ble Apex Court that the compensation paid was calculated on the basis of the loss of business and could be directly linked with what the likely profit in the years in question could be. That income was not held as business income and the same was determined as compensation for the loss o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular (supra) gives various examples of port service such as port/dock charges, mooring charges, cargo handling charges, labour charges to name a few. All these services represent an activity carried out by MPT for the service receiver. Tomorrow, if some of these services are out-sourced by MPT to a private operator for lease money, the act of leasing would not form part of port service . It will be the lessee who will be providing port service. Similar is the situation in the present case. The compensation received by MPT is in the form of lease-rental, which is outside the purview of port service as also clarified in C.B.E. C. Circular dated 9-7-2001. Further, just because wharfage on petroleum products is mentioned in the Board Circular (supra), we cannot be led to such a simplistic conclusion that all manner of handling petroleum, e.g. by ONGC which has laid its own pipeline underground/underwater, will come under the coverage of wharfage service delivered by MPT. The various minutes of meeting between MPT and ONGC and the correspondence thereof, as well as manner of determining the compensation in terms of wharfage cannot be a platform to adjudge on the correct interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
