2019 (3) TMI 952 - AT - Service Tax

Port Services - these services were demanded the same was recovered by LDT i.e. Light displacement tonnage which is on account of tonnage not brought in comparison to the agreed tonnage - Held that - From the nature of amount collected by the appellant it is clear that the said amount relates to the compensation paid by the ship breaker on account of failing to fulfill the contracted LDT. In these circumstances, it cannot be said that the said charges related to provision of any service - Prior to 1.7.2003 the levy under the head of Port Service was limited to the services provided in Major Ports. None of the ports administered by the Gujarat Maritime Board are major ports. In these circumstances, there cannot be any levy under the head of Port Service in respect of the services allegedly provided on minor ports prior to 01.07.2003 - demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the appellant is liable to pay service tax for "Port Services" provided during a specific period.
- Whether the charges levied by the appellant on services are subject to service tax.
- Whether the services provided by the appellant prior to a certain date are taxable under the head of Port Service.

Analysis:

1. The appellant provided "Port Services" during a specific period but did not charge service tax amounting to a significant sum. An SCN was issued, and the demand was confirmed with penalties and interest by the lower adjudicating authority. The Commissioner (Appeals) upheld the order, leading to the current appeal.

2. The appellant argued that the charges were based on Light Displacement Tonnage (LDT) due to tonnage discrepancies, and Gujarat Maritime Board did not provide any specific "Port Services." Referring to a previous Tribunal order in their favor, the appellant contended that the service tax was not applicable in this case.

3. The Revenue, represented by the Assistant Commissioner, supported the findings of the impugned order.

4. The Tribunal reviewed the submissions and records, noting a previous decision in the appellant's favor. The key issues were identified as whether the charges for tonnage shortfall could be considered a service and whether service tax could be demanded for services provided before a specific date.

5. The Tribunal concluded that the charges were related to compensation for failing to meet contracted LDT, not for providing a service. Additionally, before a certain date, the levy for Port Service was limited to Major Ports, and as none of the ports administered by Gujarat Maritime Board were major ports, no levy could be imposed for services on minor ports before that date.

6. Citing the previous decision where the demand was not sustained, the Tribunal set aside the impugned order and allowed the appeal, ruling in favor of the appellant.