2007 (8) TMI 60 - AT - Service Tax

Refund(Service tax) -Revenue contended that appellant is not liable for refund of service tax paid for the export cargo on the ground that said service covered under Port Service - Held that revenue contention was not correct and allowed refund

Summary

Issues:
Classification of services rendered by the appellants as "Port Services" or "Cargo Handling Services" for the purpose of Service Tax liability.

Analysis:
The case involved an appeal against the Order-in-Revision passed by the Commissioner of Central Excise, Mangalore, regarding the classification of services provided by the appellants. The appellants offered "Cargo Handling Services" for exporting iron ore fine from New Mangalore Port and paid Service Tax, seeking a refund later. The Assistant Commissioner initially classified the services under "Port Service," but the Commissioner (Appeals) remanded the case for verification. Subsequently, the Assistant Commissioner classified the services as "Cargo Handling Service" and sanctioned a refund, which was credited to the Consumer Welfare Fund. The Commissioner issued a Show Cause Notice proposing to reclassify the services under "Port Service" and re-credit the refund to the Government Account. The impugned Order-in-Original held the services as "Port Service," denying the refund and ordering the amount to be re-credited to the Revenue Account.

The appellants contended that they held a Stevedoring Licence from the Port Trust and directly rendered services to clients, not on behalf of the Port. They argued that the services were not authorized by the Port and should be classified as "Cargo Handling Services." Referring to a Tribunal decision, the appellants emphasized that services taxable under "Port Service" must be rendered by the Port or its authorized agent. They challenged the Commissioner's jurisdiction to review the order passed by the Assistant Collector de novo, suggesting that an appeal should have been filed against the Commissioner (Appeals) decision instead.

Upon careful examination, the Tribunal found that the appellants' services did not fall under "Port Services" as they were not rendered on behalf of the Port but directly by the appellants themselves. The Tribunal noted that the stevedoring license granted permission to operate within the port premises, not authorization to act on behalf of the Port. Citing Section 42 of the Major Port Trust Act, the Tribunal highlighted that the services were not conducted on behalf of the Port, and the appellants were not liable to pay Service Tax under either "Port Services" or "Cargo Handling Services" since the export cargo was excluded from taxation. Referring to a Mumbai Tribunal decision, the Tribunal emphasized that services directly rendered by the appellants did not constitute "Port Services." Consequently, the Tribunal set aside the Commissioner's order, allowing the appeal of the appellants with consequential relief.

In conclusion, the Tribunal ruled in favor of the appellants, determining that the services provided did not qualify as "Port Services" but rather as "Cargo Handling Services." The appellants were found not liable to pay Service Tax under either category, given the exclusion of export cargo from taxation. The Tribunal emphasized the distinction between services rendered directly by the appellants and those authorized by the Port, ultimately granting relief to the appellants and overturning the Commissioner's decision.