2008 (5) TMI 44 - AT - Service Tax

Jetty facilities, barges, floating cranes and tugging facilities for transporting, loading, unloading and movement of goods at jetty - income received as rent charges by the appellant, by hiring out the barges, floating cranes and tugging facilities, would not get covered under the category of the port services

Summary

Issues:
Interpretation of the term "port services" for Service Tax liability on rental income from hiring out barges, floating cranes, and tugging facilities.

Detailed Analysis:

Issue 1: Interpretation of "port services" for Service Tax liability
The appeal challenged the confirmation of Service Tax demand and penalties under Sec. 77 and 78 of the Finance Act, 1994, for the rental income received by the appellants from hiring out barges, floating cranes, and tugging facilities. The appellants argued that such activities do not fall under the category of "port services" as they were not directly related to port services. They contended that the hiring out was merely rental income and not service provision. The adjudicating authority upheld the demand and penalties, rejecting the appellants' contentions.

Issue 2: Construction of jetty and permissions
The appellant had constructed a jetty for logistical support in handling goods at Revdanda Port. The permissions granted by the Chief Ports Officer and the Government of India included conditions for making the jetty and infrastructure available when not in use by the appellant. The lease deed with the Maharashtra Maritime Board also outlined conditions for handling cargo of other parties with prior permission. However, there was no evidence of such activities being undertaken by the appellant or any payments made to the Maharashtra Maritime Board for cargo handling by third parties.

Issue 3: Application of legal precedents
The appellants cited legal precedents, including the cases of Velji P. & Sons (Agencies) P. Ltd. and Homa Engineering Works, to support their argument that the rental income from hiring out equipment did not constitute "port services." The Division Bench in the Velji P. & Sons case had ruled that activities related to goods or vessels, like hiring of equipment, did not fall under the definition of "port services" as per the Finance Act, 1994.

Judgment:
After considering the submissions and examining the permissions granted for the jetty construction, the Tribunal found that the rental income received from hiring out equipment did not qualify as "port services" for Service Tax liability. Citing the legal precedent and the Supreme Court's dismissal of a similar civil appeal, the Tribunal ruled in favor of the appellant. The impugned order confirming the Service Tax demand was set aside, and the appeal was allowed with consequential relief, if any.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal precedents cited, and the final decision reached by the Appellate Tribunal CESTAT MUMBAI regarding the interpretation of "port services" for Service Tax liability on rental income from hiring out equipment.