2012 (5) TMI 241 - AT - Service Tax

Port services - service of providing crane service has been permitted to be rendered by 3 rd parties and in that connection, agreements have been entered into between the Port Trust and the said parties and amounts have been collected as licence fee. Perusal of the agreement do not indicate any clause authorizing the said parties to represent the Port Trust in the dealing with their clients. in the case of Tuticorin Port Trust (2008 - TMI - 31436 - CESTAT, CHENNAI - Service Tax), prima-facie, supports the case of the applicant. Stay allowed. pre-deposit waived

Summary

Issues:
1. Whether granting permission for operating a crane inside a port amounts to rendering franchise service?
2. Whether the demand of service tax on charges received by the Port Trust is justified?
3. Whether the invocation of the extended period of limitation is justified?
4. Whether the stay order of the Tribunal in a similar case supports the applicant's case?

Analysis:
1. The case involved the question of whether granting permission for operating a crane inside a port constitutes rendering franchise service. The applicant argued that the parties operating the crane were not given representational rights and were paying service tax under the category of port services. The Tribunal found that the agreements did not authorize the parties to represent the Port Trust, leading to the conclusion that it may not be a case of franchise service. The Tribunal also considered a previous stay order supporting the applicant's case.

2. The Department had demanded service tax from the Port Trust on charges received for granting permission to operate the crane. The applicant contended that the fees paid were part of the amount already subjected to service tax by the service providers. The Tribunal observed that the Port Trust was authorized to permit third parties to provide crane services and that the agreements did not confer representational rights, supporting the applicant's argument.

3. Regarding the invocation of the extended period of limitation, the applicant argued that it was not justified. The Tribunal noted that a significant amount of the demand was beyond the normal limitation period, indicating a potential lack of justification for invoking the extended period. The Tribunal considered the circumstances and found in favor of the applicant on this issue.

4. The applicant's reliance on a stay order from a previous case involving a different port trust was also considered. The Tribunal found that the stay order supported the applicant's case, further strengthening the argument against treating the permission for operating the crane as franchise service. Ultimately, the Tribunal waived the pre-deposit of dues and stayed the recovery pending the appeal's disposal, based on the findings and analysis presented during the hearing.