2010 (1) TMI 396 - AT - Service Tax

Port trust service - The demand is confirmed on the ground that the appellants rendered the taxable service in the category of port service to the railway within the port area and collected the terminated charges. The case of the Revenue is that the appellants are liable to pay service tax in respect of these charges as the same are covered in the category of port trust service. Held that- in the light of the decision of New Mangalore Port Trust v. Commr. of Service Tax, 2008 -TMI - 2905 - CESTAT, BANGALORE, the railway siding charges are not covered under the scope of port service and the same are not related to vessels or goods and also the Commissioner of Central Excise in the case of Chennai Port Trust held that the service in question is Business Auxiliary Service. Keeping in view the above decision, prima facie, find that the appellants have a strong case in their favour, therefore, the pre-deposit of the amounts of service tax and penalty are waived and recovery of the same is stayed during the hearing of the appeal. Both the stay petitions are allowed.

Summary

Issues involved:
Interpretation of port service under Section 65 of the Finance Act in relation to railway siding charges.

Analysis:
The appellants filed applications for waiver of pre-deposit of approximately Rs. 12.00 Crores concerning the demand for service tax on charges collected for rendering port services to the railway within the port area. The Revenue claimed that the appellants are liable to pay service tax as the charges fall under the category of port trust service. The appellants argued that the railway siding charges are not covered under port service based on precedents like the New Mangalore Port Trust case and a decision by the Commissioner of Central Excise regarding business auxiliary services. The Revenue contended that the services provided by the appellants are indeed covered by port service, as clarified by the CBEC, citing the agreement and other activities undertaken by the appellants within the port area.

The Tribunal considered the precedents set by the New Mangalore Port Trust case and the decision by the Commissioner of Central Excise in the Chennai Port Trust case. It was noted that the railway siding charges were not related to vessels or goods, and the service in question was classified as Business Auxiliary Service. In light of these decisions, the Tribunal found that the appellants had a strong case in their favor. Consequently, the pre-deposit of service tax and penalty was waived, and recovery was stayed during the appeal hearing. Both stay petitions were allowed, and the appeals were listed for a hearing on a specified date due to the significant revenue involved.