FRESH WATER SUPPLY INCOME, Service Tax

[Haresh Raithatha]

ONE OF OUR CLIENT IS ENGAGED IN BUSINESS OF PROVIDING FRESH WATER BY TANKERS TO BARGES AND FOR OTHER FABRICATION WORK FOR CONSUMPTION PURPOSE. HE HAS NOT CHARGED SERVICE TAX ON INCOME BILL MADE FOR FRESH WATER SUPPLY BECAUSE HE CHARGES FOR COST OF WATER AND NOT TANKERS. THE RATE CHARGED PER TANKER IS RS. 2800 FOR BIG TANKERS AND RS. 1500 FOR SMALL TANKERS.

HE HAS RECEIVED NOTICE FROM SERVICE TAX DEPARTMENT THAT HE HAS NOT PAID SERVICE TAX ON SUPPLY OF FRESH WATER TO THE BARGES MENTIONING THAT THE SAID SERVICE FALLS UNDER CATEGORY OF PORT SERVICES.

KINDLY GUIDE IN THIS MATTER, WHETHER SERVICE TAX IS APPLICABLE OR NOT?

THANKING YOU IN ADVANCE.

Posts / Replies

[KASTURI SETHI]

The Department's objection is right. See Board's Circular No.B/11/1/2001-TRU dated 9.7.2001.Para No.2.1(i) refers. Also read the following case laws:-

JAISU DREDGING & SHIPPING VERSUS COMMISSIONER OF CENTRAL EXCISE, RAJKOT  [ 2014 (1) TMI 93 - CESTAT AHMEDABAD ]

WESTERN AGENCIES PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [ 2008 (8) TMI 90 - CESTAT, CHENNAI ]

[KASTURI SETHI]

Since Board's circulars are binding on the department's officers, so there is every likelihood that the demand will be confirmed. As per Section 73(8) of CGST Act, 2017, the party can save penalty, if tax is paid along with interest within thirty days from the date of issue of show cause notice.