TMI Blog2007 (11) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... nt had rendered services falling under the category "Storage and Warehousing Services" and are liable to pay ser vice tax on the said services. A show cause notice was issued to the appellant demanding the service tax and also proposing for imposition of penalty on them. Appellant contested the said show cause notice on the ground that they are registered as a minor port with the authorities and as such are providers of the port services and are not rendering any services of storage and warehouse. The said contentions were not accepted by the adjudicating authority and the demand of service tax was confirmed and penalties were imposed. On an appeal the learned Commissioner (Appeals) concurred with the findings of the adjudicating authority. The appellants being aggrieved by such order are in appeal. 3. The learned advocate appearing for the appellant submits that the impugned order is not correct. It is his submission that the services provided by the appellant in this case will not fall under the category of Storage and ware housing services for the reason that the appellant is registered as minor port and started operation in the month of January 2001. It is the submission that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent from demanding the tax from the appellant under other category of storage and warehousing services. He further strongly reiterates the findings of the learned Commissioner (Appeals). 5. Considered the submissions made by both sides at length and perused the records. The issue involved in this case is whether the services of storage of the goods by the appellant in their facility would get covered during the relevant period under the category of 'Storage and Warehousing' or would be excluded from the said category. In order to appreciate the rival claims it is necessary to look into the definition of both the categories: "port service means and service 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" "storage and warehousing includes storage and warehousing services for goods including liquids and gases but does not include any service pro vided for storage of agricultural produce or any service provided by a cold storage" 6. It can be noticed from the above reproduced definitions that the services provided by both the categories are different and could not be said to be overlapping each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may specify. (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. (3A) Without prejudice to the provisions of sub-section (3), a Board may, with the previous approval of the Central Government, enter into any agreement or other arrangement (whether by way of partnership, joint venture or in any other manner) with, any body corporate or any other person to perform any of the services and functions assigned to the Board under this Act on such terms and conditions as may be agreed upon. (4) No person authorized under sub-section (3) shall charge or re cover for such service any sum in excess of the amount specified by the Authority, by notification in the Official Gazette. (5) Any such person shall, if so required by the owner, perform in respect of goods any Of the said services and for that purpose take charge of the goods and give a receipt in such form as the Board may specify. (6) The responsibility of any such person for the loss, destruction or deterioration of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the issue in that case was regarding the taxability of the different activities in a works contract, the ratio that there cannot be a vivisection of a composite activity for the purpose of taxing will be applicable in this case, inasmuch, that in this case appellant has always projected themselves as provider of port services and the activity of the storage of the goods were in synchronization of the said port services and that cannot be vivisected for taxing under the category of storage and warehousing services also further on face of the fact that the services as provided by the appellant were covered subsequently from July 2003 under the category of port ser vices. This view of ours is also fortified from the clarification issued by the Revenue vide its letter dated 1st August 2002 wherein it was clarified as under: "3. Storage and warehousing service for all kind of goods are pro vided by public warehouses, private warehouses, by agencies such as the Central Ware F-lousing Corporation, Air Port Authorities, Railways, Inland Container Depots, Container Freight Stations, storage go down and tankers operated by private individuals etc. The storage and warehousing service prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r vices such as cargo handling and storage services, Railway haulage services, container handling services are being rendered and some of the services may be rendered directly by the port themselves by employing their own work force or by assigning such services to approved agencies. 15. In 2001 levy was imposed on port services rendered by major ports. in that context, CBEC has issued clarification dated 1-8-2002 indicating that the storage and warehousing facility of the port will be covered in the category of port services. It is not as if from 1-7-2001 service tax was levied on services rendered by all ports and exemption was granted to services rendered by minor ports. As per the prerogative, the government chose to levy tax on port services rendered by major ports from 1-7-2001 and accordingly defined the term Port. As per the definition 'Port' has the meaning assigned to it is in clause 'g' of Sec. (2) of the Major Port Trust Act, 1963. From 1-7-2003 they chose to levy service tax on port services rendered by other ports (minor ports) also. Accordingly the term "Other port" was defined which is as follows :- "other port" has the meaning assigned to "port" in clause (4) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the ratio of the judgment of the Hon'ble Supreme Court in the case of Daelim Industrial Co. Ltd. (supra) may not be applicable to the present case. The judgment relates to the taxability of the different activities in a works contract. There is no such composite contract with the importers. The storage and warehousing has been identified separately by the Port Management and charged separately. If there is arty vivisection, it is not an artificial vivisection by taxing authorities but by the Port Management themselves for their own admin istrative and operational convenience. 20.1 As regards the submissions that in some cases the appellant have issued invoices to the promoters of appellant port for non-fulfillment of committed tonnage arid did not receive the amounts so billed and hence the tax liability on such amounts is not sustainable. This an acceptable proposition and the order requires to be remanded for the purpose of ascertaining the factual position and giving abatement. 20.2 Regarding their submission that the service tax liability should have been determined taking the entire amount of the bill as cum-duty price the same is also acceptable and the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice Provider" for the period 16-8-02 to 30-6-03. The details of the facts have already been recorded in the order proposed by the learned Member (Judicial). As such, the same are not being repeated to avoid redundancy. However, the learned advocate appearing for the appellant has drawn my attention to certain observations made by the learned Member (Technical), on the basis of which he has held that the appellant is a storage and warehousing service provider, which according to the appellant is factually incorrect. The same stands enumerated in the written submission filed by the appellant which is reproduced for better appreciation. "A.1 In the Order No. M/346/WZB/Ahd/07, the Hon'ble Member (Technical) has made the following observations: (i) The appellants have set up the excess facility in order to provide storage services to the various parties. (ii) The appellants were charging storage rental in accordance with the duration of the quantity stored and not in accordance with the quantity handled irrespective of the period of duration. (iii) The appellants has acted as storage and warehousing keeper. (iv) The appellants are charging as separate amount for providing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d warehousing keeper is also factually incorrect since the appellants was set up as a port. Various approvals were given by Govt. of Gujarat and Gujarat Maritime Board for acting as a port. Notification No. 1/2001 dt. 9-1-01 was issued by the Com missioner of Customs, Ahmedabad wherein the appellants were notified as a port. Hence, the finding of Hon'ble Member (Technical) that the appellants were projecting themselves as storage and warehousing keeper, is factually incorrect. The appellants were always projecting themselves as a port and were engaged in providing the port service. A.5 The appellants submit that the appellants were charging various amounts in various categories only for the sake of convenience and ac counting purpose and not with the intention to provide the various different services. In fact, the customer was receiving only the port service and not various services. Such services were provided in order to provide the port service. Merely because separate amount was charged, it does not mean independent services were provided to the customers." Before going to the merits of the case, I have examined the above grievance of the appellant vis-a-vis relevant recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning assigned to port in Clause (Q) of Section 2 of the Major Port Trust Act. The services rendered by port in relation to imported and exported goods stand enumerated in Section 42 of Major Port Trust Act, 1963, which already stand reproduced in the order of the Member (Judicial). Such services include , inter alia , services relating to "storage of imported/exported goods". As such, Tribunal in the case of Homa Engineering Works v. CCE as reported in 2007 (7) S.T.R. 546 (Tribunal) = 2007 (81) R.L.T. 313, has held that the provisions in the Section 42 of the Major Port Trust Act are relevant for the purpose of determining scope and coverage of the expression "Port services" as defined in the Finance Act, 1994. As such, storage being an integral part of port service, being a legal obligation in terms of Section 42 of Major Port Trust Act, cannot be separately taxed. 27. I agree with the learned advocate that no port can practically operate as a port without having the storage facility. In as much as the port in question was a specialized port, set up with the stated objective of handling the bulk liquid cargo, the same cannot be imagined without having storage facility. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atic 'NO'. Applying the above analogy to the fact of the present case, it has to be held that the appellant is a minor port which was leviable to tax w.e.f. 1-7-03 and any incidental services of storing the goods in terms of legal obligations of Rule 42 of the Major Port Trust Act, cannot be separately made liable to tax as storing and warehousing services. 29. In the case of BCCI - 2007 (7) S.T.R. 384, Tribunal has held that BCCI is not an advertising agency since it is an ordinarily known as organization for controlling and promoting the Cricket in India and not as an advertising agency. For better appreciation, extract from Para 8 of the judgment is reproduced below "The definition of advertising agency cannot be read in isolation and out of context. Even if the services provided by the appellant (the scope of individual services being provided by them would be dealt with separately) is broadly covered by the expression "exhibiting" or "displaying" of advertisement, but when viewed in the context, would not convert BCCI into an advertising agency. If literal meaning is applied to the definition, the same may lead to absurd results in as much as the cinema hall flashing an ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice provided for storage of goods in the port premises." Department Circular F.No.B/ II / I /2002-TRU (sic) (B11/1 /2002-TRU) dt.1-8-02 has clarified that in order to be covered under the category of storage and warehousing service, the service must be provided by a storage and warehousing keeper. Security of the goods stored is an integral part of the storage service. The relevant extract of the Circular is as under: "5. It has been stated that in some case a storage owner only rents the storage premises. He does not provide any service such as loading/unloading, stacking, security etc. A point has been raised as to whether service tax would be leviable in such cases. it is clarified that mere renting of space cannot be said to be in the nature of service provided for storage or warehousing of goods. Essential test is whether the storage keeper provides for security of goods, stacking, loading/unloading of goods in the storage area." 31. The above clarifications issued by the Board leads to inevitable conclusion that incidental storage facility provided by the port would be covered by the definition of port service and not by storage and warehousing service. The circular dt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT or will it form a part of insurance service provided by the Card Protection Plan Ltd. The House of Lord held that the service which comprises a single service from an economic point of view should not be artificially split up. The Court held that services must be regarded as ancillary to the principle services if it does not constitute for customer an aim. in itself, but a mean of better enjoying the principle services provided. The extract of the relevant part of the judgment is as under: "18. The court further held that in deciding whether a transaction which comprises several elements is to be regarded as a single supply or as two or more distinct supplies to be assessed separately, regard must first be had to all the circumstances in which that transaction takes place, taking into ac count: "29. .. first, that it follows from article 2(1) of the Sixth Directive that every supply of service must normally be regarded as distinct and independent and, secondly, that a supply which comprises a single service from an economic point of view should not be artificially split, so as not to distort the functioning of the VAT system, the essential features of the transaction must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntenance and repaid services was made leviable to service tax w.e.f. 1-7-03. The appellant had taken registration for the said services and had started paying duty thereafter. Revenue has not raised any objection to the said registration of the appellant and payment of duty by them under the category of maintenance and repair service. If the services being rendered by them were already covered by the above services, there was no justification on the part of revenue to accept their registration under the category of maintenance and repair of services. The said category having been created w.e.f. 1-7-03, we agreed with the appellants that the said activity for the past period cannot be held to be covered under the category of port services." BCCI v. CST - 2007 (7) S.T.R. 384 "15. Our above view also gets support from the fact that another head of "sale of space or time for advertisement and sponsorship services" stands created for the purposes of service tax w.e.f. 1-5-06. However, the taxable services in relation to sponsorship services specifically excluded sponsorship of sport events. As such, we find that a subsequent entry having been enacted covering the activity without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able Service prior to 2003 and appellant is not a service provider as Management Consultant." CCE v. Sundram Finance Ltd. - 2007 (7) S.T.R. 55 (T) =2007 T1OL 837: "4. We have already enumerated the services rendered by the respondents There is substance in the submission of learned Consultant that some of the services in question are covered by the definition of "Business Auxiliary Service", which came to be introduced for levy of Service Tax w.e.f 1-7-2003. The services in question were rendered in Oct. '99. The definition of "Management Consultancy" has continued to be same even after introduction of "Business Auxiliary Services" for levy of Service Tax. It would, therefore, mean that a service appropriately classifiable as "Business Auxiliary Services" cannot fall within the ambit of "Management Consultancy". On this point, the respondent can legitimately claim support from the Tribunal decision in Glaxo Smithkline Pharmaceuticals." Zee Telefilm Ltd. v. CCE , 2006 (4) S.T.R. 349: "(f) Finance Bill, 2006 has proposed to insert a new heading of taxable service 'sale of space or time for advertisement service, excluding sale of space for advertisement in print media ..... X X X X Extracts X X X X X X X X Extracts X X X X
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