Whether repairing, chipping, cleaning and painting of the vessels of Coast Guard is taxable service under the category of “Port Services”

In the present case (as reported in 2007 -TMI - 1658 - CESTAT,MUMBAI - Service Tax)  the asseseee (appellant) are engaged in the business of repairing, chipping, cleaning and painting of the vessels of Coast Guard, Naval Dock and ONGC at Mazagaon Docks Ltd. During the period 16-7-2001 to 30-9- 2003, the appellants did such job under contract with their customers for a value of Rs. 12.93 crores approximately. They were issued a show cause notice dated 23-1-2004 alleging that the said services undertaken by the appellants are "Port Services" which are liable to Service tax.

In the instant case, honorable tribunal has held that, After carefully going through the submissions made by both the sides and after going through the relevant provisions of law, as extracted above, we find that taxable services under the net of "Port Service" means any service rendered by a port or any person authorized by such port. As such, the services which can be taxed under the said category have to be either services rendered by port itself or any person authorized by such port. Admittedly, repair of the vessel is not being done by the port.

Lower authorities also relied upon the Board's Circular No.67/16/2003-ST. dated 10-11-03, clarifying that ship repair activities at the dry docks would be taxable under the port services. The said clarification, though may be binding on the department officers, is not binding on the assessee. Having held, after examination of the relevant provisions of law that such activity would not be included under the expression 'port services', we hold that above circular issued by Board is not in accordance with the law.