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Kakinada Seaports Ltd Versus Commissioner of Central Excise, Service Tax and Customs Visakhapatnam-II

2015 (11) TMI 51 - CESTAT BANGALORE

Port services in Kakinada Port - reverse charge - infrastructural support was provided by GOAP at Port - Held That:- it is the assessee who is required to undertake the activity of assessment and there is no system of scrutiny of the assessment and confirmation of the correctness by the Revenue or the officers. In such a situation, it cannot be said that assessee was not aware of the classification of the service and the consequences of introduction of negative list and introduction of new defin .....

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r reverse charge mechanism, service tax cannot be demanded from the appellant. Nevertheless it has to be appreciated that this is a mistake on the part of the appellant since they were liable to pay the tax but did not pay. However, remedy would lie in imposition of penalty for contravention of relevant provisions but not recovery of service tax. In this case penalty has been imposed on the ground that service tax was not paid and not for mere contravention of provisions.

Demand for C .....

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ce, insurance and motor vehicles, rent-a-cab service, works contract service and services in relation to 7th berth - Held That:- Provision of health care within port area where accident can take place cannot be said to be having no nexus to port service, thus credit of ₹ 83,430/- is admissible - It is a mandatory obligation to insure all vehicles used within port area, credit is thus admissible - Rent-a-cab service is not for personal use but for movement of authorities in providing port s .....

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for exemption, on this ground denial cannot be sustained - Decided in favour of Appellant. - ST/22657/2014-DB - Final Order No. 21114 / 2015 - Dated:- 1-6-2015 - Smt. Archana Wadhwa, Judicial Member And Shri B.S.V.Murthy, Technical Member For the Petitioner : Mr. V. Ravindran, Advocate For the Respondent : Mr. Pakshi Rajan, Addl. Commissioner (AR) ORDER Per : B.S.V.MURTHY The appellant is engaged in providing port services in Kakinada Port which comes within the meaning of other port as per clau .....

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osed on the appellant. Period involved is from July 2012 to March 2013. 3. After hearing both sides in detail, we consider it appropriate that we discuss each issue in relation to the different demands and give the conclusion under that particular issue. 4. Service tax demand of ₹ 5,88,35,509/-: According to the agreement signed between Government of Andhra Pradesh (GOAP) dated 19.3.1999 with the appellants, appellant became a concessionaire for four shore connected berths at Kakinada Port .....

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constructed or provided by the appellants, etc. The appellants collect the revenue for the port services rendered by them and handover the share of the GOAP. There is no dispute on the fact nor is there any finding to the contrary that GOAP has discharged service tax liability on the amount received by them. However, the demand has arisen because the Revenue has taken a stand that appellant should pay service tax in terms of Notification No.30/2012-ST under reverse charge mechanism. The demand .....

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rvice as classifiable under Business Support Service. However, on going through the impugned order and the show-cause notice, we find that the show-cause notice took note of the fact that the definition of service underwent a change and also took note of the fact that Section 65B(49) defines the service as any activity carried out by a person for consideration and includes a declared service. The grievance of the appellant is that definition of Business Support Service under Section 65B(49) of .....

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he definition of Service under Section 65 was no longer valid was not at all taken note. It is also noticed that in reply to show-cause notice this issue was raised by the appellants and was taken note of in paragraph 6.9 and 6.10 of the order-in-original. Nevertheless, while considering the issue, there is no discussion on this aspect. In para 6.11 of the order, the appellants submission about Section 65B which refers to support service was also not taken note of and their submission that this .....

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, the definition of support service and the definition of Business Support Service prior to 1.7.2012 covered the activity of the appellants. Both the definitions are reproduced for better appreciation. Support Services of Business or Commerce means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and log .....

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telecom facilities, pantry and security; Section 105(zzzq) defines taxable service as taxable service provided or to be provided to any person, by any other person, in relation to support services of business or commerce, in any manner; The definition of support services as per Section 65B(49) reads as under: (49) Support services means infrastructural, operational, administrative, logistic, marketing or any other support of any kind comprising functions that entitles carryout in ordinary cour .....

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nded over to the appellant for operation of the port shows that, infrastructural support was provided by GOAP. Therefore under both the definition the service is covered. Under these circumstances, in our opinion, on a technical ground that the specific provision was not quoted, it would not be appropriate to set aside the entire demand especially in view of the fact that reverse charge mechanism and introduction of negative list were mentioned and in service tax matters it is the assessee who i .....

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ervice had undergone a change would show that the appellants were not prejudiced by the omission in the show-cause notice and the confirmation of demand by the Commissioner is on the ground that service is covered by the definition as we have mentioned that GOAP has provided infrastructural support. As regards this demand, it has arisen because of the introduction of reverse charge mechanism w.e.f. 1.7.2012 and but for this, the demand itself would not have arisen since payment of service tax by .....

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where service provider viz., GOAP has paid the tax even though not liable to pay the same can again be demanded from the appellant. Since taxable event is one and the same, there cannot be levy of service tax twice. Therefore we find ourselves in agreement with the submission that once the service provider has paid the tax under reverse charge mechanism, service tax cannot be demanded from the appellant. Nevertheless it has to be appreciated that this is a mistake on the part of the appellant s .....

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7,54,47,488/-: The amount of CENVAT credit demanded represents the service tax amount paid by GOAP without taking note of the fact that appellant was liable to pay the tax under reverse charge mechanism. If the appellant were to pay the tax, the appellant would have been eligible for the CENVAT credit on the basis of challan since the credit is admissible. It has been denied on the ground that acknowledgement of GOAP for payment of service tax is not a proper document. In this case, there is no .....

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made by the port officer and the port officer is not the input service provider of the appellant. 5.1 The appellant submitted that under Rule 9 of CENVAT Credit Rules, 2004, challan is specified as one of the documents. In this case challan provides complete details of service tax jurisdiction, assessee code, address and all other details as prescribed by the provisions of law. The Commissioner has disallowed only on the ground that the port officer did not issue any invoice or bill in the name .....

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l the details which are mentioned by the appellant before us, in our opinion, credit is admissible. Therefore the demand for more than ₹ 7.54 crores being the CENVAT credit cannot be sustained. 6. Demand of CENVAT credit of ₹ 6,60,545/-: This amount relates to the credit taken on health service, insurance and motor vehicles, rent-a-cab service, works contract service and services in relation to 7th berth. 6.1 It was submitted that health care with ambulance facility would be availabl .....

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dmissible and therefore held that amount of ₹ 29,558/- demanded on this ground cannot be sustained. 6.3 As regards rent-a-cab service, it was submitted that it was not for personal use but for movement of authorities in providing port service. In the absence of any specific finding to the contrary, credit of ₹ 18,688/- has to be held as eligible. 7. It was submitted that an amount of ₹ 2,82,038/- as CENVAT credit has been denied on the ground that it was taken on construction s .....

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ter referred as specified service) insofar as they are used for (a) construction or execution of works contract of a building or a civil structure or a part thereafter; or (b) laying of foundation or making of structures for support of capital goods. Definition includes works contract in relation to construction activity and not in relation to erection and installation activity. Therefore we find appellant is eligible for the benefit. 8. An amount of ₹ 2,46,800/- has been denied on the gro .....

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lated to port service or not. In our opinion, it may not be appropriate to deny. In this case, it is not the case of the Revenue that 7th berth is not going to come into existence. Appellants claim is that in respect of capital goods credit is allowed as soon as the same are received and there is no need for an assessee to wait till they are erected, installed and commissioned. Their claim for credit is similar to the one on capital goods. We find some substance in this regard. If 7th berth doe .....

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