2014 (4) TMI 445 - AT - Service Tax

Cargo Handling Agent / Port Service - scope of the term authorized by the port - reference to Gujarat Maritime Board (GMB) - principle of pari-materia statute - interpretation of law - non payment of service tax on lighterage and local transportation within the port - stevedoring, unloading and loading charges - appellant contended that amendment made by Finance Act, 2010 clearly brings out the legislative intent of not taxing services other than those provided by port or a person authorized by the port prior to 01.07.2010. - Held that - The law is laid down by the Apex Court in the case of Aphali Pharmaceuticals vs. State of Maharashtra 1989 (9) TMI 212 - SUPREME COURT OF INDIA that a statute has to be interpreted contextually and that it is unjust to decide or respond as to any particular part of law without examining the whole, to interpret and in such a way as to harmonize laws with laws, is the best mode of interpretation. The expression authorized by the port has a specific connotation under the Major Port Trusts Act, 1963 (which governs all Major Ports) as also under GMB Act, 1980, Maharashtra Maritime Board Act, Tamilnadu Maritime Board Act, and other similar Maritime Board Acts issued by various State Governments governing Minor Ports. Section 42(3) of the Major Port Trust Act, 1963 and Section 32(3) of the GMB Act, 1980 provide for an authorization from the Port for performing specified services. The said provisions further provide that the person authorized by the port shall charge or recover for the service rendered by them in accordance with the scale of rates which have been framed. There is no infirmity in referring to provisions of the GMB Act while deciphering the meaning of the expression authorized by the portused in the definition of port service under the Finance Act, 1994. It is an undisputed position that the Ports Act specifically provides for services which a Port would render and also provides for grant of an authorization in favour of a third person for rendering services. It is these services which the Finance Act seeks to tax and therefore the two statutes are with respect to the same person / thing or class of person / things and are thus pari-materia statutes. The license issued to the appellant for undertaking stevedoring operations as also lighterage has been issued under Rule 6(1)(kk) of the Indian Ports Act which deals with the power to make regulations for licensing purposes which is distinct from an authorization under Section 32(3). Decision in the case of VELJI P. & SONS (AGENCIES) P. LTD 2007 (8) TMI 35 - CESTAT, AHMEDABAD followed. - appellants were not authorized by the port for providing such services - Decided in favor of assessee. Extended period of limitation - Held that - a substantial portion of the demand against them is barred by limitation as the dispute in hand is one of interpretation and high judicial forums have at different time taken a different view. The Apex Court has in the case of Jaiprakash Industries Ltd. Vs. CCE 2002 (11) TMI 92 - SUPREME COURT OF INDIA held that in such cases where different statutory authorities have taken divergent view extended period cannot be invoked. - Demand set aside - Decided in favor of assessee.

Summary

Issues Involved:
1. Classification of services rendered by the appellant under "port services."
2. Authorization requirement under the Gujarat Maritime Board Act, 1981.
3. Applicability of extended period of limitation.
4. Demand for differential service tax and imposition of penalties.

Detailed Analysis:

1. Classification of Services Rendered by the Appellant Under "Port Services":
The appellant registered as a cargo handling agent and paid service tax on stevedoring, unloading, and loading charges. An investigation revealed non-payment of service tax on charges for lighterage and local transportation within the port, and on stevedoring services related to export cargo. The adjudicating authority classified these services under "port services," demanding differential service tax, interest, and penalties.

The appellant argued that they were not authorized by the port to provide such services, referencing the case of Velji P. Sons Agencies Pvt. Ltd. and other similar cases. The revenue contended that the services provided by the appellant were indeed covered under "port services" as defined in Section 65(82) of the Finance Act, 1994, which includes any service rendered by a port or any person authorized by such port in relation to vessels or goods.

2. Authorization Requirement Under the Gujarat Maritime Board Act, 1981:
The appellant argued that only services authorized under Section 32(3) of the Gujarat Maritime Board Act, 1981, could be taxed under "port services." The revenue countered that the term "authorized" should be understood in its ordinary sense, not necessarily requiring formal authorization under the Gujarat Maritime Board Act.

The Tribunal examined the legislative intent and found that the term "authorized by the port" should be interpreted in the context of the relevant port legislation. The Tribunal concluded that the appellant was not authorized under Section 32(3) of the Gujarat Maritime Board Act, 1981, and therefore, their services could not be classified under "port services" for the relevant period.

3. Applicability of Extended Period of Limitation:
The appellant contended that the extended period of limitation could not be invoked due to the existence of divergent judicial views on the issue. The Tribunal agreed, citing the Supreme Court's decision in Jaiprakash Industries Ltd. v. CCE, which held that extended periods could not be invoked in cases of interpretative disputes where different statutory authorities have taken divergent views.

4. Demand for Differential Service Tax and Imposition of Penalties:
The adjudicating authority had demanded differential service tax, interest, and imposed penalties under various sections of the Finance Act, 1994. The Tribunal found that the services provided by the appellant could not be classified under "port services" for the relevant period due to the lack of proper authorization. Consequently, the demand for differential service tax, interest, and penalties was deemed unsustainable.

Conclusion:
The Tribunal set aside the impugned order, holding that the services rendered by the appellant could not be classified under "port services" without proper authorization under the Gujarat Maritime Board Act, 1981. The appeal was allowed in favor of the appellant, and the demand for differential service tax, interest, and penalties was quashed.