2009 (8) TMI 290 - AT - Service Tax

Demand under Port service - The appellants are registered with the department as a provider of services classifiable under the heads Clearing and Forwarding Agent and Steamer Agent . appellant providing service of loading, unloading, reloading, transportation, etc. - Commissioner found that essential character of the services rendered by the appellants was of port services Various services rendered to clients in port premises based on certificate issued by port authorities Tribunal in precedent decisions held that the impugned activities were not required to be provided by the port under Major Port Trusts Act, 1963. The registration certificate or license issued by the port authorities cannot be considered as the authorization envisaged in the definition of port service . In the circumstances, the impugned demand fails.

Issues:
1. Whether the appellants rendered taxable services classifiable under the category of 'Port Service' and evaded payment of service tax.
2. Whether the activities undertaken by the appellants within the port area constitute 'port service' as defined under Section 65(82) of the Finance Act, 1994.
3. Whether the registration certificate issued by the port authorities to the appellants constitutes authorization as envisaged in the definition of 'port service.'
4. Whether the demand of service tax, education cess, and penalties imposed on the appellants are justified.

Analysis:
1. The Commissioner found that the appellants had rendered taxable services classifiable under the category of 'Port Service' during the period 2002-2003 to 2006-07 and intentionally evaded payment of service tax. The demand of service tax and education cess was confirmed under Section 73(1) read with Section 68 of the Act, along with applicable interest and penalties under Sections 75, 76, and 78 of the Act. The appellants challenged the demand and penalties on various grounds in the appeal.

2. The appellants argued that the activities of loading, unloading, reloading, transportation, etc., undertaken within the port area do not fall under 'port service' as defined under Section 65(82) of the Act since they were not authorized by the port to carry out these services. They contended that the license issued by the port authorities for conducting business as a C & F agent or steamer agent should not be confused with authorization. Citing relevant case laws, the appellants asserted that services rendered within the port premises on the strength of a license issued by the port do not attract service tax as 'port service.'

3. The Tribunal considered the submissions made by both sides and analyzed the case records. It was found that the appellants had rendered various services in the port premises classified under C & F agent and steamer agent, which were considered as 'port service' based on the dominant character of the services conforming to the definition. The Tribunal noted that the registration certificate issued to the appellants did not constitute authorization by the port as required under the definition of 'port service.' Referring to previous judgments, the Tribunal concluded that the license issued by the port authorities does not confer the authority of the port on the licensee and, therefore, cannot be considered as authorization for 'port service.'

4. In light of the above analysis and the precedents cited, the Tribunal set aside the impugned order, allowing the appeal of the appellants. The Tribunal held that the demand of service tax, education cess, and penalties imposed on the appellants were not justified as the activities undertaken did not fall under the category of 'port service' as defined under the Act. The registration certificate issued by the port authorities was deemed insufficient to constitute authorization for 'port service,' leading to the dismissal of the demand and penalties.

← Previous Next →