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TMI Blog2010 (5) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... not received towards port services rendered by CPT. The assessee did not put up jetties but collected charges for licenses granted to other persons to put up structures on the waters coming within the administrative jurisdiction of CPT. These charges are collected in accordance with Cochin Port(licensing of jetties, slipways and boat pen) Regulations, 1968 - these charges for licenses as not classifiable under port services or taxable under that head. - ST/37/2007 - 1251/2010 - Dated:- 12-5-2010 - S/Shri M.V. Ravindran, P. Karthikeyan, JJ. REPRESENTED BY : Shri A.K. Jayashankar, Advocate, for the Appellant. Ms. Sudha Koka, SDR, for the Respondent. [Order per : P. Karthikeyan, Member (T)]. The appellant M/s. Cochin Port Trust (CPT) is a central PSU. It manages and administers the Cochin Sea Port. CPT is registered with the department as an assessee providing Port Services . 1.1 CPT entered into an agreement with M/s. India Gateway Terminal Pvt. Ltd., (IGTPL) for operation and management including necessary modification and augmentation of facilities atCochinport. The period of contract was eight years and six months from the date of commercial operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The estate rentals received by CPT for providing this facility to store goods were held to be liable to service tax on the basis that the activity constituted service provided by CPT in relation to goods. The rentals received for space, godowns etc., for storage of goods was liable to service tax under the category port services. 2. Adjudicating the above allegations contained in the show cause notice dated30-3-2006, the Commissioner passed the impugned order No. 14/2006-S.T. dated29-9-2006. 2.1 As regards the allegations at para 1.1 1.2, the Commissioner found that the CPT had admitted receipt of Rs. 12.12 crores as consideration for grant of two licenses to IGTPL permitting them for (i) operation and management, including necessary developments, modifications and augmentation of facilities of Rajiv Gandhi Container Terminal commensurate with traffic and (ii) development, construction, operation and management of International Container Transport Terminal at Vallarpadam. The Commissioner found that the relevant clause of the agreement executed in this regard contained the following : As per clause 2.1 of the Agreement, in consideration of the licensee agreeing to pay upfr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is demand. 2.4 As regards the allegation raised in para 1.5 above, the Commissioner held that the rentals received for spaces/godowns etc. allowed for storage of goods was to be treated as remuneration received for services rendered in any manner in relation to goods. This constituted port services. The parties who had taken spaces/godowns on rent paid remuneration for such spaces and godowns meant for storage of goods which activity had nexus to services rendered in relation to goods. This was appropriately classifiable under port services. 2.5 On these findings, the Commissioner demanded a total of Rs. 1,88,10,634/- towards service tax and an amount of Rs. 3,51,866/- towards education cess due for the period16-7-2001to31-8-2005along with applicable interest. He imposed equal penalty of Rs. 1,91,62,500/- under Section 78 of the Act. He also imposed penalty @ Rs 100/- per day for defaulted service tax under Section 76 of the Act. 3. In the appeal before the Tribunal, the impugned order is assailed on various grounds : (i) License fee was paid to CPT by IGTPL for accommodation and use of the project site and appurtenant land. The fee paid was for use of the land belongi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces. It is not disputed anywhere that in respect of the services provided by IGTPL, service tax is collected and paid by IGTPL. In these circumstances, there could not be a further levy of service tax on the portion of the tax suffered amount shared between IGTPL and the appellant. It was also pertinent that insofar as royalty charges had no nexus with the actual provision of services, there was no justification whatsoever for the levy of service tax on the said charges. (iv) The rent received from agencies/individuals for use of the jetties in the port limit was not exigible to service tax. These were annual fees collected for granting permission to construct and use jetties in the port limit. This transaction did not involve provision of service by CPT in respect of either vessels or goods. The fees in question was collected under Cochin Port Trust Jetti Regulations. This was a regulatory mechanism to ensure that vessels/waterways were not obstructed through indiscriminate construction of jetties. The fee collected could not be taxed under port services. (v) The demand of service tax on amounts received by CPT in connection with leasing out of land to various persons is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all IGTPL pays service tax as demanded, the same will be available to it as cenvat credit, and can be used to meet its liability on services rendered by it. We find the impugned demand not liable to be sustained. 5.2 As regards the upfront charges, we note that these are collected from IGTPL as per clause 6.1 of the agreement entered into between the appellant and IGTPL. The relevant clause 6.1(b) reads as follows :- The ownership of all infrastructure assets, buildings, structures, berths, wharves, equipment and other immovable and Movable Assets constructed, installed, located, created or provided by the Licensee pursuant to this Agreement shall, until transfer to the Licensor in accordance with this Agreement, be with the Licensee. The ownership/leasehold rights of the Licensor s Equipment shall stand transferred to the Licensee from the date of receipt of the first installment of the Upfront Payment under Article 5.1 hereof, and in respect of the crane leased from M/s. ABG Heavy Industries Ltd., the leasehold rights and subsequently the ownership shall pass in accordance with the provisions of Article 2.4(A)(v). Provided that except as provided in Article 6.2 hereof, n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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