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2009 (5) TMI 60 - AT - Service TaxPort Service - the appellants undertake various activities inside and outside the port on behalf of their clients - The appellants are basically Custom House Agent (CHA). They also undertake the loading and unloading of cargo. This requires a stevedoring licence issued by the port The appellants are licenced to do the stevedoring work inside the port The contention of the revenue is that all the services which are carried out inside the port should be classified as Port Services . For this they had relied on the CBEC Circular No. B.II/1/2001-TRU dated 9.7.2001. Consequently the demands have been confirmed. The main contention of the appellant is that they are not the person authorized by the port under Section 42 (3) of the Major Port Trust Act and to that extent any liability in respect of Port Services should be restricted to the Service Tax paid through M/s. VPT and M/s. DLB Held that - the impugned orders do not have any merit. They are liable to be set aside the activities are not taxable under port service.
Issues Involved:
1. Liability of Service Tax on Port Services. 2. Classification of services as "Port Services". 3. Authorization under Section 42 of the Major Port Trust Act. 4. Bar of limitation and time-bar plea. 5. Double taxation and credit of Service Tax paid. 6. Exclusion of transportation costs from taxable value. 7. Imposition of penalties under Sections 76 and 78 of the Finance Act. 8. Revenue's grounds for appeal against the Commissioner's order. Issue-Wise Detailed Analysis: 1. Liability of Service Tax on Port Services: The appellants, providing clearing, forwarding, and stevedoring services, were accused of evading Service Tax on "Port Services." The Commissioner confirmed the demands based on investigations and show cause notices, which detailed substantial amounts of Service Tax on "Port Services," "CHA Services," and Education Cess. 2. Classification of Services as "Port Services": The appellants argued they were not "authorized persons" under Section 42 of the Major Port Trust Act, 1963, and thus not liable for Service Tax under Section 65(82) of the Finance Act. They cited the Tribunal's decision in Velji P. and Sons, which distinguished between licenses and authorizations, asserting their activities did not fall under "Port Services." The Commissioner, however, classified their stevedoring activities within port areas as "Port Services," relying on CBEC Circular No. B.II/1/2001-TRU. 3. Authorization Under Section 42 of the Major Port Trust Act: The appellants contended they were not authorized under Section 42(3) of the Major Port Trust Act. The Commissioner disagreed, stating the stevedoring license issued to the appellants fell under Section 42(3A), thus making them liable for Service Tax on services rendered within the port. 4. Bar of Limitation and Time-Bar Plea: The appellants claimed the demand was time-barred, as there was no suppression or misstatement with intent to evade duty. The Commissioner rejected this plea, asserting that the appellants' activities and bills were known to the department. 5. Double Taxation and Credit of Service Tax Paid: The appellants argued that Service Tax paid to M/s. VPT and M/s. DLB should be credited or excluded from their liability. The Commissioner allowed partial credit for Service Tax paid on input services but did not accept exclusion for the period 16.7.2001 to 15.8.2002 due to lack of provision for removal of taxable services' value. 6. Exclusion of Transportation Costs from Taxable Value: The Commissioner excluded transportation costs from the taxable value of "Port Services," resulting in significant reductions in the Service Tax demand. This exclusion was based on the separation of transportation charges from stevedoring services. 7. Imposition of Penalties Under Sections 76 and 78 of the Finance Act: The Commissioner refrained from imposing penalties, citing confusion about the scope of services and the appellants' cooperation with the department. This decision was justified under Section 80 of the Finance Act. 8. Revenue's Grounds for Appeal Against the Commissioner's Order: Revenue appealed, arguing the Commissioner erred by excluding Haulage and Wharfage charges and transportation costs from the taxable value, resulting in double jeopardy to revenue. They contended that the entire amount charged for composite services should be taxable. Tribunal's Final Decision: The Tribunal referenced its own and the Karnataka High Court's decisions, which held that stevedoring activities do not fall under "Port Services." Consequently, the Tribunal set aside the Commissioner's orders, allowing the appellants' appeals and dismissing the revenue's appeals as infructuous. The Tribunal concluded that no Service Tax is payable under "Port Services" for the activities undertaken by the appellants within the Visakhapatnam Port Area.
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