TMI Blog2013 (1) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... 's Circular is not clear. Thus the fact that the water is supplied by barges to the vessels only by nominated persons by port and invoice is containing the description "supply of water" would, prima-facie go against the appellant. Supply of barges/vessels to the customers without agreement - The invoice raised by the appellant gives description "supply of boats/barges for transportation, port bunkering etc. and the rate shown is a specific amount per month. In the absence of an agreement, the only option available is to arrive at a conclusion based on the invoice. The invoice used the words "supply of boats/barges". Transactions where hiring/leasing were involved attract sales tax or VAT in many States. Further, allowing another person to use the goods without giving legal right or possession and effective control is treated as service. Since no Sales Tax has been paid and no evidence has been shown that the transaction is a transaction of right to use and was liable to sale tax, the natural conclusion would be that the transaction is supply of tangible goods for use without parting with the right of possession and control. In the absence of any agreement, the only document avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) The appellant has received the consideration for "for supply of water" to the vessels. Hence, the said transaction cannot be considered as "sale of water" without any supporting evidence showing the sale price, payment of VAT etc. Merely because the appellant had supplied water by itself cannot mean that it had sold the water. The appellant has provided the services in relation to the vessels. (ii) CBEC in its Circular F.No.B/11/1/2001-TRU dated 09.07.2001 has explained that the water supply charges are taxable under the category of port service. The appellant is liable for service tax under the category of port of service as per the decision of the Hon'ble Tribunal in Western Agencies Pvt. Ltd., vs. CST, 2008 (12) STR 739 (Tri.-Chennai) and Western Agencies Pvt. Ltd. vs. CST, Chennai, (2011) 22 STR 305 (Tri.-LB). (iii) It cannot be held that the amount received by the appellant for bunker transportation is taxable with effect from 01.09.2009 under section 65(105)(zzzzl) of the Act which levies service tax on transportation of personnel and other goods within the port area as its services are squarely classifiable under the category of port service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Finance Act, 2010, through which scope of port service has been extended to any service provided in port also suggests that prior to the said amendment, service tax cannot be demanded from the appellant merely on the ground that its activities were carried out in the port. e. Western Agencies Pvt. Ltd. case is not a binding precedent. The appellant's services are not in relation to vessel. The Commissioner has wrongly relied upon Western Agencies Pvt. Ltd. case, which has been stayed by the Hon'ble High Court in Western Agencies Pvt. Ltd. v. Commissioner, 2011 (24) S.T.R. J50 (Mad.). Conclusion of the Larger Bench of this Hon'ble Tribunal in Western Agencies Pvt. Ltd. case is contrary to the decision of the Hon'ble High Court in CCE vs. Konkan Marine Agencies, 2009 (13) S.T.R. 7 (Kar.) which is binding precedent. Hence, the appellant's activities are not classifiable under the category of "port service" as these services are not supposed to be carried out by the port. f. Non-payment of sales tax on a transaction is not decisive to determine the nature of transaction, whether sale or service. The Commissioner has held that the appellant has not handed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e definition provided that 'port services are rendered in relation to goods and vessels in the port'. In this case supply of bunker to vessels is service in relation to vessel and hence covered. As regards hire of barges and vessels, he submits that the fact that the appellants have shown expenses on fuel and maintenance etc. of barges, the obvious conclusion that emerges would be that the barge/vessels has been supplied by retaining the possession and control and allowing the sister concern to use the barge. 4. We have considered the submissions made by both the sides. 5. As regards bunker, it is the submission of the appellant that, in fact, they were selling water and other ship stores to the vessels and, therefore, it is simple transaction of sale and does not include the component of service. It is his submission that because of this reason, the appellant stopped payment Service Tax. 6. We find that as regards port service, it means "any service provided by a port or any person authorized by the port in relation to port service in any manner". Port service means, "any service rendered in a port in relation to vessels or goods". In this case, there is no doubt that supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts/barges". The normal terms used when the transaction is not a supply but some other transaction as lease/hire/renting etc. Transactions where hiring/leasing were involved attract sales tax or VAT in many States. However, in the circular issued by the Board when service of tangible goods was introduced, the Board had clarified on 29/02/2008 that transfer of right to use any good is liable to Service Tax/VAT as deemed sale and it involves transfer of both possession and control of the goods to the user. Further, allowing another person to use the goods without giving legal right or possession and effective control is treated as service. In this case what is evident is that the boat/barges have been supplied as seen from invoice. Since no Sales Tax has been paid and no evidence has been shown that the transaction is a transaction of right to use and was liable to sale tax, the natural conclusion would be that the transaction is supply of tangible goods for use without parting with the right of possession and control. While the appellants have made a claim that the expenses incurred by them on fuel has not been proved to be incurred for the boats and barges supplied to customers, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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