TMI Blog2010 (10) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the appellant had not paid the service tax on these two services rendered by him - Matter remanded back. - ST/385, 406, 407, 442, 460 & 495/2008 AND 78, 84 & 85/2009 - 1255 TO 1263/2010 - Dated:- 14-10-2010 - M.V. RAVINDRAN, P. KARTHIKEYAN, JJ. ORDER M.V. Ravindran, Judicial Member - By this common order, we are disposing of the following appeals filed by the appellants before us, as the issue is same: Sl. No. Appeal No. Name of the party Amount involved 1. ST/385/2008 M/s. Aspinwall Co. Ltd. v. CCE, Mangalore Rs. 79,37,30,859 as differential value Rs. 8,32,58,767 as Service Tax a/w interest Rs. 8,32,58,767 as penalty u/s 78 Rs. 1,000 u/s 77 Rs. 200 per day or @ 2% u/s 76 2. ST/406/2008 M/s. Sri Ganesh Shipping Agency v. CCE, Mangalore Rs. 4,47,59,357 as Service Tax Edu. Cess and C F services Interest applicable on the Rs. 4,47,59,357 as penalty u/s 78 Rs. 1,000 u/s 77 Rs. 200 per day not exceeding Rs. 4,47,59,357 as penalty u/s 76 3. ST/407/2008 Mr. V. Naveen Babu Rai, Accountant, M/s. Sri Ganesh Shipping Agency v. CCE, Mangalore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Service Tax liability based upon 15 per cent of the value of the services billed by them, while they were liable to pay Service Tax on the entire amount of the billing done by them on the ground that the services provided by them were within the area of port and hence should be categorised as Port services as per section 65(105)(zn) of the Act. The show-cause notices also sought to impose penalties and demand interest from the appellants as mentioned herein above. The appellants resisted the show-cause notices on various grounds and mainly on the ground that they have been discharging Service Tax on the 15 per cent of the entire value collected by them, as the services rendered by them were on turnkey basis. The appellants also took a plea before the adjudicating authority that the matters have been settled in some of the appellants cases in the previous orders and that the judgment and order of the Hon ble Tribunal in the case of Homa Engg. Works v. CCE [2007] 9 STT 294 (Mum. - CESTAT) and Velji P. Sons (Agencies) (P.) Ltd. v. CCE [2008] 12 STT 148 (Ahd. - CESTAT) and Konkan Marine Agencies v. CCE [2008] 12 STT 82 (Bang. - CESTAT) will be applicable in this case. They als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board vide Budget Circular D.O.F. No. 334/1/2010-TRU, dated 26-2-2010 as applicable from the date of enactment of the Finance Bill, 2010. It is his submission that since the period involved in all the cases in which he is appearing is prior to the amendment as proposed in the Finance Act of 2010, the matters stand covered by the judgment of the Konkan Marine Agencies case (supra) and Others. Hence, the appeal should be allowed with consequential relief. 5. Shri K.S. Ravi Shankar assisting Advocates, appeared on behalf of M/s. Alwares and Thomas. The learned Counsel Shri Ravi Shankar submits that the issue is no longer res integra and has been settled by series of decisions including the Konkan Marine Agencies case (supra). It is also his submission that in terms of Trade Notice No. 39-CE (Service Tax 39)/97, dated 11-6-1997, of the New Delhi Commissionerate, para 2.5 thereto, the appellants had adopted 15 per cent of the gross value as the taxable value for purpose of paying Service Tax and hence having followed the TradeNotice issued by the New Delhi Commissionerate, the Department s dispute does not have any place to stand. It is his submission that this aspect of the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices and Clearing Forwarding services , the matters need to be remanded back to the adjudicating authority, to consider the submissions made by them as regards the non-applicability of Service Tax liability. For this proposition, he would submit that the entire Order-in-Original has proceeded on the ground that the appellant is liable to be covered under the Service Tax net of Port services . It is his submission that the adjudicating authority has not come to any conclusion as regards taxability of the services of the appellant under Steamer Agent services and Clearing Forwarding services . It is his submission that the appellant s activity as a custom house agent and having been given stevedoring permission is for services provided within the Port premises, and services provided by the licence holder is not on behalf of Port but is directly to the clients in relation to export cargo which would be excluded from the purview of taxes under Port services. In this connection, he relies on the following judgments : (i) Konkan Marine Agencies case (supra) which is affirmed by the Hon ble High Court of Karnataka in Konkan Marine Agencies case (supra). (ii) Kin-ship S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax is payable on actual receipt basis and not on accruals basis. For this proposition, he relies on the following judgments : (i) Tempest Advertising (P.) Ltd. v. CCE [2007] 9 STT 168 (Bang. - CESTAT) (ii) Alpa Management Consultants (P.) Ltd. v. CST [2008] 17 STT 98 (Bang. - CESTAT) (iii) Free Look Outdoor Advertising v. CC CE [Final Order Nos. 1907 1908 of 2006, dated 15-11-2006] 2007 (6) STR 153 (Trib. - Bang.) (iv) Synergy Audio Visual Workshop (P.) Ltd. v. CST [2008] 14 STT 321 (Bang. - CESTAT). 6.2 It is his submission that during the relevant period of time, the reimbursed expenses were not liable to Service Tax as has been clarified by the Board vide Circular No. B.II/3/98-TRU, dated 7-10-1998. It is his further submission that the impugned order travels beyond the scope of the show-cause notice as the show-cause notice was issued demanding Service Tax under CHA as well as under Port services while the demands got confirmed only under Port services without making proper classification. Reliance is placed on the following judgments : (i) Alang Marine Ltd. v. CCE C 2006 (204) ELT 297 (Trib. - Mum.) (ii) Vaspar Concepts (P.) Ltd. v. CCE 2006 (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Warehousing service and Port services and also the appellant s discharge of service tax on 15 per cent of the value of taxable service terms of the Circular was correct. It is his submission that as argued earlier by other counsel, that the services, which were rendered by the appellants, were sought to be categorised by the adjudicating authority as Port services on the finding that the services were rendered in the port, he would submit that the decision of Konkan Marine Agencies case (supra) will cover the issue in his favour and also the amendments made in Finance Act, 2010 being prospective in nature, they are now to discharge Service Tax from 8-5-2010 on these services. It is his submission that the Hon ble Supreme Court, as in the case of Velji P. Sons (Agencies) (P.) Ltd. (supra) has held that activities of handling, stevedoring, clearing and forwarding within the premises would not fall under the category of port services. It is also his submission that the order of the learned Commissioner for the earlier period has attained finality, as there being no appeal filed by the Revenue or any cross-objection filed against an appeal filed by the assessee against the said i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are rendered by them within the port area. It is submitted that in all these cases, the Mangalore Port Trust has authorised appellants to undertake the activity of stevedoring and other activities. It is submitted that the appellant would not have done so, unless there is an authorisation and licence which in itself indicates that it is an authorisation given by the Port and hence it would fall under the category of Port services as defined under section 65 of the Finance Act, 1994. As regards the judgment in the case of Konkan Marine Agencies (supra), it is submitted that these services were covered under Export cargo handling service and liability to Service Tax does not arise. It is submitted that the facts of the case of Konkan Marine Agencies (supra) are totally different than the facts in all these matters. It is submitted that the co-ordinate Bench of the Tribunal in Chennai, in the case of Western Agencies (P.) Ltd. v. CST [Misc. Order No. 365/2008, dated 26-8-2008] has referred the matter to a Larger Bench and has held that scope and ambit of Port service defined in section 65(82) of the Finance Act, 1994 to be found out without reference to anything contained in secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are that the appellants herein were holders of Stevedoring Licence and in few cases were also rendering the activity of handling shipment of iron ore, granite blocks, aluminium, etc. within the port area of Mangalore Port and Karwar Port. It is also undisputed that the appellants herein had taken the Service Tax registration under the category of CHA or Steamer Agent or C F Agents. It is also undisputed that the appellants are discharging their Service Tax liability under the category of CHA on 15 per cent of the gross value of the bills raised by them for the services rendered to their customers. Revenue s contention is that the entire amount, which is collected by the appellants from their customers, should be taxed under Port Services . The adjudicating authority, while coming to the conclusion that the appellants herein had rendered the Port services , as in almost all cases, recorded the following findings : 27. The issue relates to classification of services rendered under port services and demand of differential duty. The contention of the service provider is that they are rendering services as Custom House Agent (CHA) and paying service tax under the said categor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30. In the above mentioned clarification even though Management Committee at Paradeep Port is not authorized by the port for rendering its services within the port, yet it was considered by the Board that as long as the contractors utilized by Management Committee for rendering their services are issued licenses or permits by the Paradeep port, it should be treated as authorized by the Port Trust for rendering services in relation to vessels and goods within the port area. On the same analogy, since the service provider are issued with stevedore licence by the NMPT to operate within the port area it cannot therefore be said that they are not authorized by the NMPT for rendering services in relation to vessels and goods within the port area. Port service is expected to be provided by the port or by person authorized by port in any manner. Instead of performing all the services by themselves, port has preferred to perform certain services and permitted/authorized to do the remaining services by stevedore. For example, section 42 of the Major Port Trusts Act, 1963 specify performance of service by Board or other person. Section 42(1) says that a Board shall have power to undertake the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the outset, we may record that an identical issue arose as regards the assessee having a stevedoring licence and his operations were sought to be brought under the category of Port services by the revenue authorities in the case of Konkan Marine Agencies (supra). Aggrieved by such an order, the appellants preferred an appeal before the Tribunal in Appeal No. ST/75/2007, which was disposed of by Konkan Marine Agencies case (supra). While allowing the appeal filed by the assessee therein, the Bench recorded findings, which, we may respectfully reproduce : 6. We have gone through the records of the case carefully. The point at issue is whether the services rendered by the appellants amount to Port Services and whether they are liable to pay Service Tax in terms of the Finance Act, 1994, We find that the appellants obtained the stevedoring license from the Mangalore Port Trust for carrying out the stevedoring operations. The stevedoring operations actually mean loading and unloading of cargo within the port premises. The Commissioner has interpreted that the appellant is carrying out the services within the port and he has been authorized by the port to render such services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the Port services under section 65 of the Finance Act, 1994 while allowing the appeal filed by assessee. Aggrieved by such an order, Revenue preferred an appeal to the Hon ble High Court of Karnataka in CE Appeal No. 12 of 2008, which was decided by a judgment dated 13-3-2008, which is Konkan Marine Agencies case (supra). In the said judgment, their Lordships have recorded the following findings, from which we respectfully reproduce relevant paragraphs : 15. We may further clarify that the definition of port service as found in section 65(82) of the Finance Act would not be applicable to the facts of the present case. The definition of port service reads 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. 16. According to the learned Counsel for the appellant since the assessee is a licence holder, therefore he would be the person authorized within the definition of port service as mentioned hereinabove. 17. We do not agree to the aforesaid contentions advanced by the learned Counsel for appellant for the simple reason that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 or 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 Gazette o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 26-2-2010, 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 . As the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
