2014 (5) TMI 139 - AT - Service Tax

Waiver of pre deposit - Port services - Held that - appellant had entered into contract with GMB for Built, Operate, Transfer and Maintain project in respect of Hazira port. The appellant herein had constructed one of the contracted projects, of the said port, but for the construction of bulk/general cargo terminals, they gave such rights to another party on upfront payment of an amount, which has been considered by the revenue as one time payment received by the appellant as rent for land lease. In our view, the definition of the Port Services which was amended in 2010 under the category of Port services needs to be appreciated in detail vis-a-vis the clauses of contract - Matter is arguable one - Conditional stay granted.

Summary

Issues: Stay petition for waiver of pre-deposit of Service Tax liability, interest, and penalty under Port Services category.

Analysis:
The appellant filed a stay petition seeking a waiver of pre-deposit of an amount confirmed as Service Tax liability, interest, and penalty. The appellant argued that they were not liable to discharge any Service Tax as they had only transferred the right of concession to another person, which could be categorized as renting of immovable property services rather than Port Services. The Adjudicating Authority's findings were contested as being in variance with the factual composition. The Department representative, however, contended that the services rendered by the appellant in a port fell under the amended definition of Port Services post-2010. The Tribunal considered the submissions and perused the records, noting that the appellant had entered into a contract with the Gujarat Maritime Board for a project at Hazira port, where they transferred rights to another party for the construction of bulk/general cargo terminals. The Tribunal acknowledged the need for a detailed analysis of whether the upfront amount received by the appellant should be classified under taxable Port Services. Recognizing the arguable nature of the case, the Tribunal directed the appellant to deposit Rs 25 lakhs within 8 weeks and report compliance, with further proceedings contingent on this compliance. The application for waiver of pre-deposit of the remaining amount was allowed, with recovery stay till the appeal's disposal.

This judgment revolves around the issue of whether the upfront amount received by the appellant should be considered taxable under Port Services or as renting of immovable property services. The Tribunal highlighted the need for a deeper consideration of this issue at the final disposal of the appeal, indicating that the appellant had an arguable case. The Tribunal's decision to direct the appellant to deposit a specified amount within a set timeframe demonstrates a balanced approach to addressing the matter, ensuring compliance while allowing for further deliberation on the classification of the services rendered. The Tribunal's order for compliance reporting and subsequent proceedings reflects a structured and procedural handling of the case, aiming to facilitate a fair and thorough examination of the appellant's contentions.