2014 (1) TMI 1044 - AT - Service Tax

Waiver of pre deposit - Collection of port dues - Period of service - Business Auxiliary service - Other port service - Held that - after 1-7-2010, the services rendered in non-major ports which are otherwise considered as other ports have also been brought into Service Tax net. According to the definition of port service , any service rendered in port irrespective of classification of the service has to be treated as port service . In such a situation, after 1-7-2010, the services rendered by the appellant for port maintenance in the form of maintenance dredging, improvement to aids to navigation, hydrographic surveys, etc. would clearly fall under the head other port service . Once this is accepted, when the port dues are collected, value of this service rendered within the port would form part of port dues. It is further evident from; the agreement that whatever the amount, the appellant received would be from the port dues only and no additional amount was paid by the Government of Andhra Pradesh. In these circumstances, it becomes clear that the amount of 15% of actual expenditure paid to the appellant is port dues collected from port users. It is settled law that the same service cannot be taxed twice under the same head - Prima facie case in favour of assessee - Stay granted.

Summary

Issues:
Interpretation of Service Tax liability on amount received by appellant under Agreement with Government of Andhra Pradesh.

Analysis:
The judgment revolves around the Service Tax liability on the amount received by the appellant under an Agreement with the Government of Andhra Pradesh (GOAP) for port maintenance services at Kakinada. The appellant was tasked with collecting port dues and utilizing them for port-related expenses. The dispute arose regarding the classification of this amount for Service Tax purposes.

Issue 1: Pre-1-7-2010 Service Tax Liability
Before 1-7-2010, the department treated the additional 15% received by the appellant as "Business Auxiliary Service" subject to Service Tax. The appellant contended that the services rendered were part of maintenance and had already incurred Service Tax when collecting port dues. The Tribunal acknowledged the complexity of the issue and the appellant's argument that the same service should not be taxed twice. It deemed the issue required detailed consideration due to statutory provisions and precedent judicial pronouncements.

Issue 2: Post-1-7-2010 Service Tax Liability
After 1-7-2010, services in non-major ports were brought under the Service Tax net. The appellant's services such as maintenance dredging, hydrographic surveys, etc., were categorized as "other port services." The Tribunal noted that the 15% amount received by the appellant was part of port dues collected from users, and no additional payment was made by GOAP. It held that taxing the same service twice under the same head was impermissible. Consequently, the Tribunal granted a complete waiver and stay of recovery for the dues adjudged against the appellant during the appeal process.

In conclusion, the judgment delves into the intricate details of the Agreement between the appellant and GOAP, dissecting the nature of services rendered and the applicability of Service Tax. It highlights the importance of avoiding double taxation and ensuring compliance with statutory provisions in determining Service Tax liabilities for port maintenance services.