2011 (3) TMI 528 - AT - Service Tax

Demand - Port service - Whether any provisions other than clause (q) of section (2) of the Major Port Trusts Act, 1963 or any provisions other than clause (4) of section (3) of the Indian Ports Act, 1908 are applicable to interpretation of port service defined under section 65(82) of the Finance Act, 1994 - According to law in force prior to 2010 any service provided to any person, by a port or any person authorised by the port, in relation to goods or vessels in any manner became taxable with effect from 16-7-2001 enacting Section 65(72)(zn) to the 1994 Act - it was noticed that there was only one amendment by Finance Act, 2003 to include other port providing port services to be taxable. The consequence of amendment were examined and it was noticed that the service provided by a minor port which was termed by law as other port did not bring any difference to the definition of port service while the range and magnitude of service provided by Major Port and Minor Port are as per 1963 Act and 1908 Act - others provisions of these acts are not applicable to service tax. Whether stevedoring in a major or minor port is a port service within the meaning of this expression defined under section 65(82) of the Finance Act, 1994 - If stevedoring service is accepted to be a service not provided by port or other port , the term port service defined by 1994 Act shall defeat the purpose of the service tax law - The statutory definition suggesting the service provided in any manner serves the purpose of serving the clients of stevedore in relation to goods or services indirectly through stevedores - Decided against the assessee Whether transportation of cargo after its unloading from a vessel, to a place of storage within the port area held to be services ancillary to stevedoring and whether, ipso facto, these, services can be classified as port services under section 65(82) ibid - The services provided in any manner directly or indirectly by a port or other port bring such services to the fold of port services for taxation under the category of port services - Facilities and infrastructure inside a port or other port serve the purpose of a port or other port - Decided against the assessee

Summary

Issues Involved:
1. Applicability of other provisions of the Major Port Trusts Act, 1963, and the Indian Ports Act, 1908, to the interpretation of "port service" under Section 65(82) of the Finance Act, 1994.
2. Classification of stevedoring as a "port service" under Section 65(82) of the Finance Act, 1994.
3. Classification of ancillary activities/operations related to stevedoring as "port services" under Section 65(82) of the Finance Act, 1994.

Issue-wise Detailed Analysis:

1. Applicability of Other Provisions of the Major Port Trusts Act, 1963, and the Indian Ports Act, 1908, to the Interpretation of "Port Service" under Section 65(82) of the Finance Act, 1994:

The Tribunal examined whether provisions other than clause (q) of Section (2) of the Major Port Trusts Act, 1963, or clause (4) of Section (3) of the Indian Ports Act, 1908, are applicable to the interpretation of "port service" defined under Section 65(82) of the Finance Act, 1994. The Tribunal concluded that the Finance Act, 1994, serves a distinct purpose of raising revenue through service tax and is not in pari materia with the Major Port Trusts Act, 1963, or the Indian Ports Act, 1908, which deal with port administration and infrastructure. The Tribunal held that the definition of "port service" under the Finance Act, 1994, is exhaustive and restrictive, limiting the scope to services provided by a port or other port or any person authorized by such port in relation to vessels or goods. Thus, other provisions of the 1963 and 1908 Acts are not applicable for interpreting "port service" under the Finance Act, 1994.

2. Classification of Stevedoring as a "Port Service" under Section 65(82) of the Finance Act, 1994:

The Tribunal addressed whether stevedoring in a major or minor port is a "port service" within the meaning of Section 65(82) of the Finance Act, 1994. Referring to the judgment of the Hon'ble High Court of Karnataka in Konkan Marine Agencies v. Commissioner of Service Tax (2009 (13) S.T.R. 7 (Kar.)), the Tribunal concluded that stevedoring services, which involve the loading and unloading of cargo from vessels, are indeed "port services." The Tribunal emphasized that stevedoring services are provided under the authorization of the port, fulfilling the requirement that "port service" may be rendered by a person authorized by a port or other port.

3. Classification of Ancillary Activities/Operations Related to Stevedoring as "Port Services" under Section 65(82) of the Finance Act, 1994:

The Tribunal examined whether activities such as intercarting (transportation of cargo within the port area), storage of cargo, blending of different grades of coal, and other cargo handling activities within the port area can be classified as "port services." The Tribunal held that these activities are ancillary to stevedoring and are provided in relation to goods or vessels within the port area. Therefore, they fall under the definition of "port services" as per Section 65(82) of the Finance Act, 1994. The Tribunal emphasized that the term "port service" covers any service rendered by a port or other port or any person authorized by such port in any manner in relation to vessels or goods, thus including the aforementioned ancillary activities.

Conclusion:

The Tribunal answered all the referred questions in favor of the Revenue. It held that provisions other than those defining "port" in the Major Port Trusts Act, 1963, and the Indian Ports Act, 1908, are not applicable to the interpretation of "port service" under the Finance Act, 1994. Stevedoring services and ancillary activities related to cargo handling within the port area are classified as "port services" under Section 65(82) of the Finance Act, 1994. The Tribunal directed the Registry to place the respective cases before the appropriate Bench for further proceedings.