TMI Blog2019 (3) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 customers under the head Port Services , under section 65(105)(zzl) of Finance Act, 1994 - the demand of service tax on port services on the pilotage charges received by the appellant are upheld and any amounts which they must have already paid will be adjusted against the same, but the amounts need to be recomputed reckoning the amounts they received as cum tax amounts. Time limitation - Held that:- The appellant has definitely violated the conditions of the Act and Rules and has not paid the service tax. The benefit of not paying the service tax is evident. Therefore there is no force in the argument that they have not violated any provisions of Act with an intent to evade payment of service tax. Jurisdiction - Held that:- The services were rendered within the jurisdiction of the adjudicating authority and therefore the order was correctly iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 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 service tax and an amount of ₹ 2,69,881/- towards education cess. He allowed deduction of ₹ 42,44,476/- towards service tax and ₹ 84,890/- towards education cess which they have already paid at Gurgaon through T.R. 6 Challan. He also confirmed recovery of interest under section 75 of the Finance Act and imposed a penalty of ₹ 1,38,93,799/- under section 78 of the Finance Act, 1994. He also imposed penalty of ₹ 100/- per day upto 17.04.2006 and @ 2% of the amount confirmed per month from 18.04.2006 till the payment of the confirmed amount. He further imposed a penalty of ₹ 1,000/- under section 77 of the Finance Act, 1994 for their failure to take registration of the service tax for the Port Service. It is the case of the Revenue in their appeal No. ST/625/2008 that the amount of penalty imposed unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities. 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 the vessels. It only authorises them to carry out berthing and mooring operations. Therefore, they are not liable to pay service tax on these services. 5. They were not providing any port services and arranging for certain services through third party contractors for the buyer s vessels. The letter of agreement between them and their clients merely provides that they shall arrange for tag assistance, pilotage etc. for movement and positioning of the vessels at the Port. 6. It was never the intention of the parties that the appellants shall themselves provide such services. Therefore, they are not liable to pay service tax. 7. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 009(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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Gujarat Mariline Port Act does not apply to this Port in question as it is located in Andhra Pradesh and there is no corresponding requirement of authorisation to be in a particular format with respect to this Port. The case of Aspinwall Co. Ltd. (supra) does not apply in this case because in that case, the question was whether loading and unloading of goods, drawback processing, etc. within the Port area 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 ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has received authorisation from the Port authorities and if so whether it can be considered as a valid authorisation. In the case laws discussed above, wherever the services were rendered in the Major ports, the word authorisation has specific meaning under the Major Ports Act and if it has not been fulfilled even if the assessee was permitted to do some activities, it was held to be not an authorisation. In the case of Shreeji Shipping (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xx PORT OFFICER KAKINADA Copy to M/s Atlantic Shipping Company, 31/1/16, Dr. Sitaramayya Buildings, Suryanarayanapuram, Kakinada With a request to furnish all the required documents pertaining to the Vessel. Copy submitted to the Director of State Ports, Kakinada for information. Sd/- Harbour Crafts Superintendent, PORT OFFICE, Kakinada 12. 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. 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 proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax. On the question of jurisdiction we find that the services were rendered within the jurisdiction of the adjudicating authority and therefore the order was correctly issued by him. Wherever they have paid the service tax on these services, he has already taken them into account while computing the tax liability. On the question of computation of demand, if the appellant has not collected the service tax from their customers, the amount which they have collected need to be taken as cum tax value and correspondingly the amount of service tax needs to be re-computed. 14. Interest under section 75 on the recomputing amount of service tax also needs to be paid. 15. On the question of penalty, in view of our findings that the appellant has not paid service tax in violation of the Act and Rules with an intention to evade, we find no ground to set aside the penalties. However, the penalties need to be re-computed in view of the re-computation of service tax as above. 16. In view of above, (a) the demand of service tax on port services on the pilotage charges received by the appellant are upheld and any amounts which they must have already paid will be adjusted agains ..... X X X X Extracts X X X X X X X X Extracts X X X X
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