2024 (3) TMI 499 - AT - Service Tax

Levy of service tax - port services - business auxiliary service - providing services in the 'port area' in the capacity of a sub-contractor to the stevedores/main contractors - failure to pay Service Tax on services even though they were registered under the category of port services - HELD THAT - Any service rendered within the port area by any person to any other person, in any manner has been brought under the Service Tax net under the category of port service only with effect from 01.07.2010 vide the Finance Act, 2010. Prior to this date, only such port services provided by a person authorized by the port in relation to a vessel or goods were liable to Service Tax under the category of port services. As the Respondent was not authorized by the port to render the services in the port area, the services rendered by them are not liable to Service Tax under the category of port services prior to 01.07.2010 - As the demand in this appeal pertains to the period from 2005-06 to 2007-08, it is held that the services rendered by the Respondent are not liable to Service Tax under the category of port services - there are no infirmity in the impugned order passed by the ld. adjudicating authority in dropping the demand of service tax under the category of port services. Demand of Service Tax under the category of business auxiliary service - HELD THAT - The Respondent has given cranes and other equipments on hire to stevedores and other clients for handling of cargo. These services are classifiable under the category of supply of tangible goods service which has been brought under the Service Tax net only with effect from 16.05.2008. Thus, for the period prior to 16.05.2008, the services of hiring of equipment for handling of cargo in the port area cannot be charged to Service Tax under the category of business auxiliary service. Accordingly, there are no infirmity in the order of the ld. adjudicating authority in dropping the demand of service tax under the category of 'business auxiliary service'. The dropping of the demands by the ld. adjudicating authority in the impugned order upheld - appeal of Revenue dismissed.

Summary

Issues involved:
The issues involved in the judgment are the demand of service tax under the categories of 'port service' and 'business auxiliary service' by the Department, as well as the classification of services provided by the Respondent in the port area.

Port Service:
The Respondent provided transportation services along with loading and unloading of export cargo within the port area. The adjudicating authority found that the services rendered by the Respondent were not liable to service tax under the category of 'port service' as the transportation of goods along with incidental handling was considered essential for freight service, and the Respondent was not authorized by the port to render services in the port area prior to 01.07.2010. Therefore, the demand of service tax under the category of 'port service' was dropped.

Business Auxiliary Service:
The Department contended that the renting of equipment by the Respondent for loading and unloading of cargo in the port area should be classified as 'business auxiliary service' and be subject to service tax. However, the adjudicating authority observed that the definition of 'business auxiliary service' did not cover the activity of stevedoring, and the renting of equipment for handling cargo fell under the category of 'supply of tangible goods service' introduced with effect from 16.05.2008. As a result, the demand of service tax under the category of 'business auxiliary service' was also dropped.

Decision:
The Appellate Tribunal upheld the decision of the adjudicating authority to drop the demands of service tax under both the 'port service' and 'business auxiliary service' categories. The Tribunal concluded that the services provided by the Respondent in the port area were not liable to service tax under the respective categories due to the lack of authorization by the port prior to 01.07.2010 for 'port service' and the introduction of the 'supply of tangible goods service' only from 16.05.2008 for 'business auxiliary service'. Therefore, the appeal filed by the Department was dismissed.