TMI Blog2020 (3) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... vent to levy service tax. It would have been a different case if they had not bought or sold water but had only rendered some service in connection with the supply of water. For instance, if the users had purchased the water from someone else and if the appellant had only pumped or transported the water, etc., it would have definitely qualified as a service and if the service is rendered within the port, it would be exigible to Service Tax as Port Service. Selling goods on their on account to customers does not qualify as a service or else, every merchant in the country should be held to be rendering a service. Thus, sale of water is not exigible to Service Tax. Renting of immovable property service - HELD THAT:- A plain reading of the show cause notice in this case itself shows that the appellant have received amounts as advances for construction of a terminal for bunkering. There is no evidence that they have collected any rent towards bunkers or any other immovable property. If indeed, they have received any amounts for renting immovable property, it is not reflected in the show cause notice. Merely because the appellant has received some amounts from their customers they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present appeals have been filed. The details of the 3 appeals are as follows: Appeal No. Period of Dispute Impugned Order Ref. Demand on Service Tax demanded (Rs) Penalty (Rs) 2820/ 2012 ** 2005-06 to 2009-10 OIO NO. 15/2012 dt.17.07.2012 of Respondent 1.Sale of Water 2,84,28,406 3,05,83,495 u/r Sec.78 10,000 u/r Sec.77 2.Renting of immovable property 21,30,184 3. GTA 24,905 **By Misc. Order No. 20015-20016/2014 dt. 03.01.2014, the CESTAT granted waiver for 1 2 and for 3, the amount of ₹ 24,905 was deposited, as per order. 22246/ 2015 @@ 01.07.2012 to 2013-14 OIO NO. 08 dt.18.09.2015 of Respondent 1.Sale of Water 50,05,799 2.Alleged excess adjustment of Service Tax 25,71,854 10,000 u/r Sec.77 75,77,653 u/r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State Government as a part of exempted turnover and all documentary evidence clearly confirms that the consideration in question was received by the appellant only for sale of fresh water and not for any service. 4. They have not only sold the water but also have purchased it and have produced their purchase invoices for fresh water. It is a sale of water under the Andhra Pradesh VAT Act and the same cannot be considered as taxable service. In fact, not only has the sale of water been declared in their VAT returns, there has been correspondence with the State Government regarding the eligibility of exemption or otherwise from VAT on the sale of water. The cost of water has been indicated based on the quantity (kilo litres) of water sold and it is not for service. Water is also a commodity subject to excise duty under Chapter 22 of the Central Excise Tariff Act, 1985. 5. Without prejudice to the above arguments, he would submit that even as per CBEC s Circular No. 334/1/2012-TRU dated 16.03.2012 [Para 2.5.3], it is clarified that where the dominant nature of a transaction is sale of goods or immovable property then such transaction would be treated as such. In the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment they were entitled to retain the advances received which they did. There is nothing in the show cause notice to show that they have rented any immovable property and collected rent for the purpose. Merely, because they have received some amount from their customers it does not mean that they are liable to pay service tax on such amounts unless it can be shown that the amounts were received towards rendering a taxable service which in this allegation is renting of immovable property. Revenue has not discharged this onus as far as this demand is concerned. 9. As far as the demand of service tax on GTA service is concerned, Learned Counsel submits that they are not contesting this and have already paid the amount and is only praying that the penalties may be set aside. 10. As far as the alleged excess adjustment of service tax is concerned, he would submit that the show cause notice does not dispute that there was excess payment of service tax made by them to the extent of ₹ 25,71,845/- which was adjusted. This excess payment was on account of arithmetical mistake and not on account of any reasons given in Rule 6 (4b) of Service Tax Rules, 1994 and therefore, the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase of goods other than newspapers, subject to the provisions of entry 92A of List I (Entry 54 of List II). Entry 92A of List I empowers the Union to impose taxes on sale or purchase of goods in interstate trade. Thus, the intra-state sale and purchase of goods can be taxed by the States while inter-state trade can be taxed by the Union. An interesting question of law was before the Constitutional bench of the Hon ble Apex Court in the case of Gannon Dunkerly Company (Madras) in Civil Appeal No. 21 of 1956 decided on 01.04.1958 [published in 2015 (330) ELT 11 (SC)] The Provincial Government of Madras imposed tax on deemed sale of goods which were not actually sold but were used by builders in executing composite works contracts. Builders often undertake composite works contracts and bill the customer a total sum for the construction including both their services and the value of the goods to be used. The Government of Madras province levied Sales tax on the value of the goods used in composite works contracts treating such use as deemed sales. The Government of India Act, 1935 under which the law was passed by the Provincial Government of Madras distributed powers between the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on sale or purchase of goods . Before the amendment, the scope of taxation of the States was limited and everything else fell under the purview of the Parliament under entry 97 as residuary power to tax. By the 46th amendment, Parliament truncated its own powers and expanded the powers of the state to that extent. 18. The implications of these constitutional provisions is that if something falls explicitly within the legislative competence of the State to tax as sale or purchase of goods after introduction of clause 29A under Article 366, it no longer falls under any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists as per Entry 97 of List I and hence is out of the legislative competence of the Parliament to tax. Thus, the power of the State to levy VAT/Sales tax and the power of the Union to levy service tax are mutually exclusive. Legal provisions 19. For a tax to be levied, a taxable event (such as sale, purchase, manufacture, import, export, earning income, etc.) must occur and such taxable event must be covered by the charging section of the Act. Imports, for instance, can be taxed under the Customs Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rendered within a port or other port, in any manner. Section 65 (105) (zn) Taxable service means any service provided or to be provided to any person, by any other person, in relation to port services in a port, in any manner. Provided that the provisions of Section 65A shall not apply to any service when the same is rendered wholly within the port. 23 Renting of immovable property service is covered in Section 65 (105) (zzzz) read with section 65 (90a) which read as follows: Renting of immovable property includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce but does not include - (i) renting of immovable property by a religious body or to a religious body; or (ii) renting of immovable property to an educational body, imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre; Explanation.-For the purposes of this clause, for use in the course or furtherance of business or commerce includes use of immovable property as factories, office buildings, warehouses, theatre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able under Port Service and not otherwise. Major ports have been defined as ports and others as other ports under Chapter V of Finance Act, 1994. 24. Sale of Water: As far as the sale of water is concerned, it is evident from the records of the case as well as the submissions of the Ld. Counsel for the appellant that they had purchased water and sold it to ships at a higher price. Thus, this is in our considered view, a case of purchase and sale of goods. Sale of goods is a taxable event for Sales Tax or VAT levied by the State Government. It appears from the records, that the appellant had reported the sales in their VAT returns to the State Government claiming an exemption from VAT available on sale of water. The availability of the exemption for sale of water is in dispute with the VAT department. There is no dispute with the State Government that the transaction is one of sale of water. Sale is not a taxable event to levy service tax. 25. It would have been a different case if they had not bought or sold water but had only rendered some service in connection with the supply of water. For instance, if the users had purchased the water from someone else and if the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of Madras in the case of M V Anushree Fame Vs M/s Synergy Shipping Pvt Ltd., [A.No. 7370 and 7371 of 2010]. We have gone through these judgments of the Hon ble High Courts of Gujarat and Madras and neither of which is on the question of whether sale of goods within the port area is exigible to service tax under the head of port services. We therefore find that the present facts are distinguishable and the case laws relied upon by the DR does not apply to these appeals. 27. Renting of immovable property : A plain reading of the show cause notice in this case itself shows that the appellant have received amounts as advances for construction of a terminal for bunkering. There is no evidence that they have collected any rent towards bunkers or any other immovable property. If indeed, they have received any amounts for renting immovable property, it is not reflected in the show cause notice. Merely because the appellant has received some amounts from their customers they do not have to automatically pay service tax unless such amounts are relatable to rendition of a taxable service. 28 . GTA services : Learned Counsel concedes the demands GTA services and confirms that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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