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2019 (3) TMI 815

with permission of the Port Authority? - Held that:- The amount received by them under the head “pilotage revenue” was in the nature of reimbursement of costs and not in the nature of consideration for any service. Even if it was treated as services rendered by them upto 18.04.2006, the value of taxable services for the purpose of charging service tax was a cost charged by them for providing taxable service. The amounts which they received as reimbursement were not chargeable to service tax. - Whether the appellant has received authorisation from the Port authorities and if so whether it can be considered as a valid authorisation? - Held that:- A plain reading of the above letter shows that the appellant has been authorised to undertake various activities including pilotage and for this purpose, they need a licenced pilot. Therefore, the requirement under section 65(105)(zzl) that the services must have been rendered at Port or by a person authorised by the Port, is fulfilled. In this case is appellant, authorised by the Port has rendered the services. - Thus, the appellant was fully liable to pay service tax on the pilotage charges which they received from their customer .....

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on Petroleum Limited, Cairn Energy India Private Limited (the appellant herein) and Ravva Oil (Singapore) Private Limited for the purpose of prospecting, exploring, developing and production of petroleum from Ravva Oil and Gas Field area. As a part of the agreement, the appellant conducts all the joint operations under the agreement. A show cause notice dated 21.07.2007 was issued to the appellant covering the period 01.07.2003 to 30.09.2006 demanding service tax of ₹ 1,93,79,560/- (including Education Cess) under Port Services invoking extended period of limitation, under the proviso to Section 73(1) read with Sections 66 & 68 of Finance Act, 1994. It was also proposed to charge interest under section 75 and impose penalties under sections 76, 77 & 78 of the Finance Act. Service tax was proposed to be levied on a value of ₹ 19,33,00,000/- of taxable services i.e. Port Services rendered by them during the aforesaid period. The amounts in question were received by them as pilotage charges. The appellant contested the demand both on merits and on limitation. After following due process, Ld. Adjudicating Authority confirmed a demand of ₹ 1,79,53,285/- towards .....

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in Section 65(76) as Other Port has the meaning assigned to Port in Clause (4) of Section 3 of the Indian Ports Act, 1908 but does not include the port defined in Clause (81). (f) A Port has been defined in Indian Ports Act as follows: Port includes any part of a river or channel in which this Act is for the time being in force. 4. The appellant contends that Other Port in view of the above definitions means any port other than the major port . Ravva Port in which they are operating is declared as minor port and hence falls under the definition of other port . The concerned Port Authorities in this case is Kakinada Port authority. They are not acting as port authority or providing any services to buyers vessels. In fact, they themselves were paying port charges to the port authorities. Therefore, they were only users of port facility. The show cause notice relies on the letter No. P3/397/96, dated 05.07.1996 issued by Port Officer, Kakinada intimates that they were permitted by the Kakinada Port Authority to carry out the berthing and tanker vessels at SBM and loading of crude oil into the tanker vessels. The letter in question does not authorise them to provide port services to t .....

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016(43) S.T.R. 430 (Tri.-Hyd.) Shreeji Shipping 2014(36)STR 569 (Tri.-Ahmd.) Aspinwall & Co. Ltd. 2011(21)STR 257 (Tri.-Bang.) HML Agencies Pvt. Ltd. 2018(12)GSTL 46 (Tri.-Bang.) Velji P & Sons (Agencies) Pvt.Ltd. 2007(8)STR 236 (Tri.-Ahmd.) South India Corporation (Agencies) Ltd. 2010(17)STR 170 (Tri.-Bang.) Konkan Mrine Agencies 2007(8)STR 472 (Tri.-Bang.) Konkan Marine Agencies 2009(13)STR 7 (Kar.) Reliance Ada Group Pvt. Ltd. 2016(43)STR 372 (Tri.-Mumbai) Synchron Research Services pvt. Ltd. 2011(24)STR 654 (Tri.-Ahmd.) Reliance Clinical Resarch Services P Ltd 2016(41)STR 113 (Tri.-Mumbai) B.A. Research India Ltd. 2010(18(STR 604 (Tri.-Ahmd.) Brindavan Beverages Pvt. Ltd. 2007(213) E.L.T. 487 (S.C.) Padmini Products 1989(43)ELT 195 (S.C) Anand Nishikawa Co. Ltd. 2005(188)ELT 149 (S.C) PUshpam Pharmaceuticals Company 1995(78)ELT 401 (S.C.) Pragathi Concrete Products Pvt.Ltd. 2015(322)ELT 819 (S.C). Nizam Sugar Factory 2006(197)ELT 465 (S.C.) ITW India Limited 2009(14)STR 826 (Tri.-Bang.) TATA Consultancy Services Limited 2018 (18)GSTL 478 (Tri.-Del.) Pepsi Foods Limited 2010(260)ELT 481 (S.C) Hindustan Steel Limited 1978(2) ELT (J 159) S.C.) Shreenath Motors Pvt. Ltd. 20 .....

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ea were in the nature of port services and it was held that they were not. In this case, the amounts were collected towards pilotage. If pilotage is not a service of the Port, nothing can be a port service. Pilotage of ships and vessels is one of the fundamental activity in any port undertaken by Port or under their authorisation by somebody else. In this case the authorisation has been issued by the Port Officer to the appellant in exercise of which he undertook pilotage activities and collected the charges thereof. He, therefore, prayed that Revenue s appeal may be allowed and the assessee s appeal may be rejected. 9. We have carefully considered the arguments on both sides and perused the records. The issue to be decided is whether the appellant is liable to pay service tax on Port Service as per Section 65(105)(zzl) in respect of the services rendered by them in Ravva Port with permission of the Port Authority. Upto 22.06.2010, Port Services under Section 65(105)(zzl) were the services provided to any person by other port or any port authorised by that port in relation to port services, in any manner . Port services were defined in Section 65(82) as any service rendered by a po .....

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supra), the activities were in a minor port which was regulated under Gujarat Maritime Board Act, 1980 which provided for a specific mechanism of authorisation. This act does not apply in the present case and there is nothing on record to show that there is a corresponding law in Andhra Pradesh that applies to this Port. Therefore, the word authorisation has to be understood in its common sense i.e. permitting somebody to do some activity. We have gone through the letter of the Port Officer, Kakinada issued to the appellant (letter No. P3/397/96, dated 05.07.1996) which is clearly, in our view, an authorisation which reads as follows: GOVERNMENT OF ANDHRA PRADESH PORT DEPARTMENT - From To Capt. D. Satyanarayana M/s Command Petroleum (India Port Officer I/c Pvt. Limited, KAKINADA 533 007. Willington Plaza, 2nd floor, Andhra Pradesh 90, Anna Salai, MADRAS-2 Letter No. P3/397/96 dated 5.7.1996 Sir, Sub: RAWA PORT - Handling of Crude Oil at Single Point Mooring at Rawa Oil Fields by M/s Command Petroleum (India) Pvt. Ltd. - Permission accorded. Ref: 1) G.O.Ms. No. 19,TE&B (P) Department, dt. 30.01.96. ___ As discussed with Mr. Peter Jarvis, Production Manager, Rawa Development on 2 .....

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rised by the Port has rendered the services. The next question is whether the services in question are in the nature of services which are rendered by the Port. In the cases discussed above, activities such as stevedoring or processing draw back claims were held as not activities undertaken by the Port were held nor liable to service tax even if they are rendered within the port area. The present demand is that pilotage charges. Pilotage is the process of helping the ship come to the berth. It is one of the primary activities undertaken by any Port because it is their responsibility to show the path to the berth to the ship. They are fully familiar with the contours of the under-sea surface and the traffic and accordingly pilot ships into berths. When the ship has to leave the Port, they similarly pilot it back to the main sea. When the ship reaches about a kilometer or so from the Port, the pilot guides it and two tugs push it from behind into the berth. The process is reversed when the ship leaves the Port. This activity has been undertaken by the appellant with authorisation of the Port and they have received charges for the same. They have credited these amounts in their accoun .....

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