2019 (1) TMI 185 - AT - Service Tax

Levy of Service Tax - Sundry Handling - the appellant has argued that amount of ₹ 33,33,333/- is not taxable as the same is appropriation of reimbursement of ₹ 10,00,00,000/- received as upfront fee for the period of 30 years for the lease granted to ABG Kandla Container Terminal Limited - principles of natural justice - Held that - The reasons given by the appellant was not properly dealt with by the Adjudicating Authority and therefore, the same was not considered and the observations of the Adjudicating Authority against this head are vague and without any authority of law - demand cannot be set aside. Toll Collection and Entry Fee collected from any person/ vehicles carrying goods within the port area - Circular F. No. 354/27/2012-TRU dated 22.02.2012 - Held that - The entry charges and toll charges can be in the ambit of term Port Service only with effect from 01.07.2010 - In this case, the Entry fees and Toll fees are in relation to the goods and persons attending to vessel and/ or goods only. Thus, this service can be covered under the definition of Port Service. Therefore, the demand in respect of Toll charges and Entry Fees charges is upheld. Demand of service tax - Royalty for containers and Income from 11th and 12th cargo berth - Held that - Identical matter was decided in the case of Cochin Port Trust vs. CCE, Cochin 2010 (5) TMI 495 - CESTAT, BANGALORE , where it was held that Letting out the port premises for operation by IGTPL does not amount to rendering of port service. In any case, if at all any service tax is paid on this amount, the same would be available to IGTPL as Cenvat credit, which can be used for paying service tax on port services rendered by it - the demand under the head of Royalty for containers and Income from 11th and 12th cargo berth cannot be sustained and is set-aside. Demand of service tax under the head of renting of immovable property services - Township income - Held that - There is no discussion on the nature of service against which this amount is received, who is the person who paid the amount and what is the arrangement between the appellant and the person paying for such amounts. In these circumstances, we find that the impugned order is not a speaking order on this issue and therefore, the same needs to be set-aside and issue needs to be remanded for determining the exact grounds and arguments on the basis of which the demand under the head of township income was confirmed - matter on remand. CENVAT Credit - input services - Telephone used by various officers installed at their residential premises - Held that - The Port operates 24x7 at 365 days and there can be any emergency and all the officers needs to be accessible all time. In this circumstance, telephones at the residential premises are essential ingredient for provision of service and thus, credit on the Telephone installed at the residential premises cannot be denied - credit allowed. CENVAT Credit - input services - taxi and bus services used for movement of the employees to various places - Held that - The taxi and bus services are used for movement of the employees to various places and the credit cannot be denied. Extended period of limitation - penalty - Held that - Most issues in dispute are either contentious or decided in favor of the appellant. In these facts and circumstances, there is no merit in invocation of extended period or in position of penalty under Section 78. Appeal allowed in part and part matter on remand.

Issues Involved:
1. Demand of service tax on Entry Permit Fee and Toll Collection.
2. Demand of service tax on testing charges of bitumen.
3. Demand of service tax on miscellaneous income.
4. Demand of service tax on Township income.
5. Denial of Cenvat credit on various services.
6. Invocation of extended period and imposition of penalties.

Issue-wise Detailed Analysis:

1. Demand of Service Tax on Entry Permit Fee and Toll Collection:
The appellant argued that service tax cannot be charged on Entry Permit Fee and Toll Collection, relying on Circular F. No. 354/27/2012-TRU dated 22.02.2012, which clarified that service tax is not leviable on toll charges paid by road users. The Revenue contended that these charges are part of payments for services within the port area. The Tribunal found that the Circular refers to tolls for road users and does not apply to charges within the port. The definition of "Port Service" before and after 01.07.2010 was considered, and it was determined that entry fees and toll charges are related to goods and vessels, thus falling under "Port Service." Therefore, the demand for service tax on Toll Collection and Entry Fees was upheld.

2. Demand of Service Tax on Testing Charges of Bitumen:
The appellant did not contest the demand under this head, except for an adjustment in the demand under miscellaneous income. The Tribunal confirmed the demand for testing charges of bitumen but required re-quantification to avoid duplication with miscellaneous income.

3. Demand of Service Tax on Miscellaneous Income:
The appellant contested the taxability of amounts received under sundry handling, entry permit, royalty for containers, income from berth No. 11 and 12, and other receipts. The Tribunal found that the reasons given by the appellant for sundry handling were not properly addressed by the Adjudicating Authority and relied on the decision in Cochin Port Trust – 2011 (21) STR 25 (Tri. Bang.) to set aside the demand for sundry handling. For entry fees and toll collection, the Tribunal upheld the demand as discussed earlier. The demand for royalty for containers and income from cargo berths was set aside, relying on similar decisions in Cochin Port Trust cases, where it was held that such income is not taxable as port services.

4. Demand of Service Tax on Township Income:
The demand was confirmed under the head of renting of immovable property services. The Tribunal noted that the impugned order did not provide a detailed discussion on the nature of services and the arrangement between the appellant and the payer. Therefore, the demand was set aside, and the matter was remanded for a fresh decision to determine the exact grounds and arguments.

5. Denial of Cenvat Credit on Various Services:
The Tribunal addressed several aspects of the denial of Cenvat credit:
- Telephone Charges: Credit was allowed for telephones installed at residential premises of officers, considering the 24x7 operation of the port.
- Taxi/Bus Hiring Charges: Credit was allowed for taxi and bus services used for employee movement, but not for school bus services.
- Transportation Expenses for CISF Staff: Credit was allowed as the service was used for security purposes.
- Construction Services: The appellant did not contest the demand for reversal of credit where documents were unavailable or for construction/repairing work of staff colony, and the demand was sustained.

6. Invocation of Extended Period and Imposition of Penalties:
The Tribunal found no merit in the invocation of the extended period or the imposition of penalties under Section 78, considering that most issues were contentious or decided in favor of the appellant. The appellant, being a Public Sector Unit, was not found to have any malafide intention to evade taxes.

Conclusion:
The appeal was disposed of with the following outcomes:
- Demand on testing charges of bitumen confirmed, subject to re-quantification.
- Demand on Toll Collection and Entry Fee sustained.
- Demand under the head of Port service on sundry charges, royalty for containers, and services at cargo berths set aside.
- Demand under renting of immovable property services set aside and remanded for fresh decision.
- Cenvat credit partly allowed as detailed.
The matter was remanded to the Commissioner for re-quantification and order in terms of the Tribunal's observations. The appeal was disposed of accordingly.

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