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TMI Blog2014 (7) TMI 972X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax on the same under the category of port service, it cannot be said that the service rendered, if at all, by GMB was a port service. There is no estoppel against the law - except for the ownership of waterfront, GMB does not own anything. The port and the infrastructure thereon vests in M/s. UCL Ltd. and this is permissible under Indian Law as there can be two owners, one for the waterfront and another for port and infrastructure thereon. The law in India is that land can belong to one and building thereon can be of other person as compared to law in U.K. wherein building vests in the owner of the land - in the absence of any port service having been rendered by GMB, the question of charging differential service tax under the category of port service does not arise at all. The show-cause notice has not invoked any other head for taxing the service, if any. Renting of immovable property - allowing the user of waterfront for construction of port and infrastructural facility - Held that:- it can reasonably be concluded that allowing the user of the water front by M/s. GMB to M/s. UCL Ltd. was allowing the use of immovable property by GMB to M/s. UCL Ltd., and hence, ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsustainable and is liable to be set aside - Decided in favour of assessee. - ST/389/2009 & 403/2011 - 10931,10932/WZB/AHD/2013 - Dated:- 1-8-2013 - RAVINDRAN M.V. AND THAKUR H.K., JJ. ORDER:- M. V. RAVINDRAN (Judicial Member).- These two appeals are directed against Order-in-Original No.43/BVR/Commissioner/2009, dated July 16, 2009. Since both the appeals are against the same impugned order, these are being disposed by a common order. The relevant facts that arise for consideration are that M/s. Gujarat Maritime Board (hereinafter referred to as the appellant ), is a statutory body constituted under the Gujarat Maritime Board Act, 1981. The appellant being a statutory authority under the Act, administers and operates minor ports, in the State of Gujarat. By the said authority granted to the appellant, the appellant collects shipping and landing fees for cargo handled at waterfront/port/captive jetty in the State of Gujarat. The appellants have prescribed the rate of shipping and landing fees and other charges in the schedule of port charges, which has been notified. As per the policy drafted by the Government of Gujarat for development of minor port, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2009 was issued to the appellant by invoking extended period of limitation. The show-cause notice also proposed to charge interest and penalty under sections 76, 77 and 78 of the Finance Act, 1994. The appellants herein contested the issue on merit as well as on limitation. The adjudicating authority, after following the due process of law, confirmed the demand raised, interest thereof and imposed penalties under sections 77 and 78 but dropped the imposition of penalty under section 76 of the Finance Act, 1994. The appellant, aggrieved by such an order, has filed an appeal. The Revenue is also aggrieved by such an order for dropping of such penalty under section 76 of the Finance Act, 1994 and has filed an appeal against the very same order. The learned senior counsel Shri V. Sridharan, on behalf of the appellant, submitted as under: 4.1 Service tax is a contract based levy. The amount of rebate which is not received by the appellants cannot be brought to tax. 4.1.1 As per the port policy of State Government of Gujarat, the appellants have given licence/right to construct and operate captive jetty to M/s. Ultratech Cement Ltd. The appellants prescribe the rates for vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to taxing the value. Therefore, section 3 of the 1944 Act is the charging section which creates the liability to pay excise duty whereas section 4 deals with assessment or quantification of liability ad valorem. Under section 4, duty of excise is chargeable with reference to the value of excisable goods and 'value' is defined by section 4. The price charged by the manufacturer on sale by him represents the measure of that value, therefore, in the judgment of this court in the case of Union of India v. Bombay Tyre International Ltd. reported in [1986] 59 Comp Cas 460 (SC); AIR 1984 SC 420, it has been held that under the excise law, prices and sale are related concepts. In that judgment, it has been further observed that 'price' under the excise law has a definite connotation. That, the 'value' of an excisable article has to be computed with reference to the price charged by the manufacturer, the computation being made in terms of section 4. Therefore, section 4 of the 1944 Act requires the Department to find out the real value of the excisable article. As stated above, excise law is a tax on value. This is the most important distinction between the excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be considered in determining the value of taxable services because the excise duty is on manufacture, where as, service tax is on the value of consideration received in cash or kind for the services rendered. Therefore, unless the cost of electricity supplied free of cost constitutes the consideration received by the assessee, the cost of electricity would not be includible in the value of taxable service. 13. Instead of supplying the electricity free of cost for the manufacture of oxygen, if the customers were to permit the assessee to purchase electricity from third parties and the customers were to reimburse the cost of electricity, it could not be said that the cost of electricity reimbursed constituted consideration received by the assessee for rendering the services. Similarly, if electricity is supplied free of cost for the manufacture of oxygen and the said oxygen belongs to the customer, then, it cannot be said that the cost of electricity constitutes the consideration in kind received by the assessee. 4.1.6 Recently, the honourable Delhi High Court in the case of Intercontinental Consultants and Technorats P. Ltd. v. Union of India [2013] 59 VST 487 (Delhi); [2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 66 levies service tax at a particular rate on the value of taxable services. Section 67(1) makes the provisions of the section subject to the provisions of Chapter V, which includes section 66. This is a clear mandate that the value of taxable services for charging service tax has to be in consonance with section 66 which levies a tax only on the taxable service and nothing else. There is thus inbuilt mechanism to ensure that only the taxable service shall be evaluated under the provisions of section 67. Clause (i) of sub-section (1) of section 67 provides that the value of the taxable service shall be the gross amount charged by the service provider 'for such service'. Reading section 66 and section 67(1)(i) together and harmoniously, it seems clear to us that in the valuation of the taxable service, nothing more and nothing less than the consideration paid as quid pro quo for the service can be brought to charge. Sub-section (4) of section 67 which enables the determination of the value of the taxable service 'in such manner as may be prescribed' is expressly made subject to the provisions of sub-section (1). The thread which runs through sections 66, 67 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services to the appellants. The licensee, i.e., M/s. Ultratech Cement Ltd. has created a right in their favour only not supplied anything to the appellants. It is true that the ownership of the jetty/infrastructure vests with the appellants but the right to exploit the assets created is always with M/s. Ultratech Cement Ltd. M/s. Ultratech Cement Ltd. has got right to use those assets. That right itself is an asset for M/s. Ultratech Cement Ltd. 4.2.1 In the present case, the licensee, i.e., M/s. Ultratech Cement Ltd. has created/constructed the captive jetty for their own business purposes and created right to use the same for a specified period. That cannot be treated as consideration for the services to the appellants. For this reason also, the entire demand is liable to be set aside. 4.3 The issue is squarely covered by the recent decision of the honourable CESTAT Bangalore in the case of Cochin Port Trust [2011] 45 VST 106 (CESTAT-Bang); [2011] 21 STR 25 (Trib.-Bang), which holds that no tax at all is payable. 4.3.1 The Cochin Port Trust entered into an agreement with M/s. India Gateway Terminal Pvt. Ltd. for operation and maintenance at port. The Cochin Port Trust a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. to construct and operate the captive jetty. The said consi deration cannot be covered under the definition of port services. In view of this, the entire demand is liable to be set aside. 4.3.4 The above position is accepted by the Board in Circular F. No. BII/I/2000-TRU, dated July 9, 2001. In para 2.2.of the said circular, it is clarified as under: 2.2 All these charges form part of taxable value of port service. Demurrage charges are recovered by port authority for storage of goods. The fact that these charges apply only if the goods overstay a prescribed free period, does not detract from their being in the nature of a charge for providing a service in relation to goods. Accordingly they would form part of taxable value. The Dock Labour Board is liable to pay service tax on the labour charges recovered by them. However, estate rentals of the port which is charged for renting of accommodation provided to outsiders and port users, lease rental for land, etc., will not be liable to service tax as these are not services rendered in relation to goods or vessels. For any other charge not mentioned above, the Commissioner may decide the inclusion/exclusion in the value of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Maritime Board, including reserves and surplus are also required to be deployed and credited to a separate fund to be utilized for development of minor ports within the State. In this connection, we quote sections 73, 74 and 75 of the 1981 Act herein below which read as under. 4.4.5 In view of the above, the appellants submit that there cannot be levy of service tax on shipping and landing fees collected by them as the charges are collected for discharging sovereign function assigned to them under the scheme of Constitution. 4.4.6 The above principle is accepted by CBEC vide circular No. 89/7/ 2006-ST dated December 18, 2006. The relevant extracts are as under: 2. The issue has been examined. The Board is of the view that the activities performed by the sovereign/public authorities under the provision of law are in the nature of statutory obligations which are to be fulfilled in accordance with law. The fee collected by them for performing such activities is in the nature of compulsory levy as per the provisions of the relevant statute, and it is deposited into the Government treasury. Such activity is purely in public interest and it is undertaken as mandatory and sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority provides a service, which is not in the nature of statutory activity and the same is undertaken for a consideration (not a statutory fee), then in such cases, service tax would be leviable as long as the activity undertaken falls within the scope of a taxable service as defined. 4.4.8 The same views were reiterated in FAQ 2008 dated December 4, 2008 issued by DGST which is as under: 8.6 Is there any exemption from payment of service tax if the receiver/provider of the service is the Central/State Government organization and public sector undertakings? 8.6.1 No. There is no such exemption. All service providers, including the Central/State Government Organizations and the public sector undertakings rendering the specified taxable service, are liable to pay service tax. 8.6.2 If a Government Department (sovereign)/public authorities performs any mandatory or statutory function under the provisions of any law and collect any fees, such activity shall be treated as activity purely in public interest and will not be taxable. 8.6.3 If such authority performs a service, which is not in the nature of statutory activity, for a consideration, the same s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 12 VST): 8. We have carefully considered the submissions and we note from the stay order given in these matters that the activity carried out by the parties is sovereign activity performed by the State functionaries. The Office of the Chief Election Commission is constituted under the Constitution of India. They are not carrying out the activity of photographic service by issuing electors photo identity cards. The issue of electors photo identity cards cannot be considered as 'photo identity7 falling within the definition of 'photographic service' as per section 65(78) as well as section 65(79). The circular referred to by the counsels clearly apply to the facts of the case. Furthermore, the Tribunal, in the case of CCE v. Ankit Consultancy Ltd. [2008] 12 VST 327 (CESTAT-New Delhi); [2007] 6 STR 101 (Trib.-Delhi), has clearly held that any activity performed by a State organ to discharge the sovereign activity of the State cannot be brought under the tax-limit. This finding is also supported by the circulars noted supra. Further, it is seen that the Board's Circular No. 141/52/95-CX and 195/20/CX views this activity to bring them under the definition of ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the State Government Department is not liable for levy of service tax is upheld, as sovereign function cannot be subject-matter of service tax. The Board circular referred to by the appellant is on beneficial circular and it will have retrospective effect as held in the case of Suchitra Components Ltd. v. Commissioner of Central Excise, Guntur [2007] 20 VST 726 (SC); [2007] 8 RC 204 (SC); [2007] 208 ELT 321 (SC). Furthermore, the assessee held a bona fide view that their statutory and legislative functions were beyond the ambit of service tax. Therefore, such bona fide view held by them has to be accepted for the purpose of granting the benefit of time bar in terms of the Supreme Court ruling cited by the learned counsel noted supra. Appellants succeed in this case for the reasons noted supra and in the light of the judgments cited supra and hence, the appeal is allowed. 4.4.12 Similar views were taken in another case of Commissioner of Customs Central Excise and Service Tax v. C.S. Software Enterprise Ltd. [2008] 10 STR 367 (Tri-Bang), wherein it was held as under: 4. We have considered the submissions. We find that the issue in this case has already been decided in te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or suppression on their part, penalty under section 78 also cannot be imposed. The appellants rely on recent decision of the honourable Tribunal in the case of Royal Travels v. Commissioner of C. Ex. [2011] 21 STR 31 (Tri-Ahmd). 4.6 Section 80 is invocable in the present case: 4.6.1 Without prejudice to the submissions made above, as the matter is one of interpretation of legal issues, there is reasonable cause on the part of the appellants not to pay service tax. 4.6.2 Since there is reasonable cause and the issue involved is interpretation of the complex legal provisions, the appellants pray that section 80 of the Finance Act, 1994 may be invoked in the present case and no penalty be imposed on the appellants. The learned Additional Commissioner (Authorised Representative), would contest the submissions made by the learned Senior Counsel and also defended the order of the adjudicating authority on the following grounds: 5.1 Wharfage: The very first submission of GMB on this issue was that this activity cannot be subjected to levy of service tax as what they are doing is only in discharge of their sovereign function. This argument has no merit on account of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, as far as wharfage is concerned, there was never any dispute regarding taxability of the wharfage services. M/s. GMB has all along been collecting wharfage charges from M/s. L T and paying service tax as per their calculation. The case of the Department was simply that GMB has not been paying service tax on gross wharfage charges collected. The jetty, even though initially constructed at the expense of M/s. L T, was always a property of GMB, as per the agreement between the two of them. Hence, it was always understood between the two of them that GMB was the service provider and L T was the service recipient. That is why L T have been paying due service tax on 20 per cent. of the wharfage to GMB and GMB, in turn, has been paying the service tax to the Government and also filing returns. The dispute on this issue was only one of valuation. (b) As per Ministrys letter F. No. B.11/1/2001-TRU, dated July 9, 2011, issued when port services were first brought under tax net, it was clarified that, inter alia, wharfage for general cargo and berthing and mooring charges, are part of port services. The honourable Supreme Court in the case of Commissioner of Trade Tax, U.P. v. Kaj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finished products that are manufactured by the licensee. In view of the above stated purpose of the agreement, the argument that no service is being provided at the jetty is a fallacious argument. (f) Schedule D of the scale of rates, as fixed by GMB, according to which only they are calculating the wharfage to be charged from M/s. L T and the rebate to be granted, clearly mentions that all cargo that is actually landed and shipped at berths, jetties, wharfs, quays or piers at Gujarat Maritime Board ports, shall be liable to pay wharfage charges as per the following table . This clearly indicates that the charges being collected by GMB from M/s. L T are in respect of landing and shipping only and that the port is a GMB port only. 5.1.3 Another argument of M/s. GMB is that, at the captive jetty, M/s. L T are providing services to themselves and hence the same cannot be levied to service tax. This argument is not tenable on the following grounds: (a) As mentioned at para (A)(2)(i) above, the jetty even though initially constructed at the expense of M/s. L T, was always a property of GMB, as per the agreement between the two of them. Hence, it was always understood be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent (para 3 on page 2 of the agreement) clearly says that the agreement is on build, transfer, operate and maintain basis. This is further amplified in clauses 12 and 18 of the agreement which make it absolutely clear that the ownership of the jetty shall always vest with GMB. The major difference between a BOOT contract and the present one is that in a BOOT contract, the ownership of movable and immovable assets initially vests with the contractor investing money and the ownership is transferred at the end of the contract period (page 113 of Vol. II of the appellants' submission refers) while in the present case the ownership of the jetty has always vested with GMB. Hence, all the submissions and the citations on the premise that the present agreement is a BOOT contract are misplaced and irrelevant. (f) The appellants' other submission that because the depreciation of the cost of jetty is claimed by M/s. L T, the same will automatically mean that L T are the owners of the jetty, is also a fallacious one. As per clause 14 of the agreement, GMB has given a specific NO OBJECTION to M/s. L T in this regard, even while underlining, in a host of other clauses, that the owners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the rebate . . . which clearly suggests that the initial cost of the jetty, to be incurred by L T has to be refunded back to L T by the mechanism of jetty rebate. Similarly, clause 13 of the agreement prescribes that whatever rebate and concession is granted by the Board against the cost of construction, the equivalent amount at the relevant time shall be utilised by the licensee in repayment of loan so that at the end of the period of this agreement when the licensee may not have right of rebate under this agreement, then the construction is free of any liability in respect of such loan. Clause 24 of the agreement details the elements of the cost of construction which will be taken into account to work out the quantum of rebate. Similarly clause 22 of the agreement prescribes that the rebate, which will be a set-off against the capital investment, will not be available once the capital investment has been recovered through the rebate and landing and shipping fees have to be paid at the normal rate thereafter. All the above clauses in the agreement clearly show that rebate is only a mechanism of book adjustment between M/s. L T and GMB as L T, on account of hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Explanation also makes it clear that what L T is paying is only the NET wharfage and not the actual wharfage. (e) The period involved in the appeal is from October 2003 to March 2006. The present issue, as far as wharfage charges are concerned, relates only to the correct value on which service tax has to be discharged. Thus, as per section 67 of the Finance Act, 1994 the value of any taxable service shall be the gross amount charged by the service provider for such service rendered by him . The appellants have contended that the provisions of section 67 which were made applicable in the show-cause notice have been inserted with effect from April 18, 2006 and that their case was covered by the provisions of the unamended section 67. Thus, in view of the decision of the Tribunal in the case of Agrawal Colour [2012] 48 VST 154 (CESTAT-New Delhi), there is no major change in the essence of section 67 except that the provisions after April 18, 2006 have been made more elaborate. Thus, the so-called rebate which was actually no rebate from the prescribed rate of payment of port charges, but the same was only an adjustment from the standard rate in order to fully reimbu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration received, which is 20 per cent. of the wharfage, to arrive at the correct value for the discharge of the service tax by GMB. As mentioned at para 4(iv) supra, Schedule D of GMB's notification dated July 9, 2003 itself explains that what the captive jetty holders are paying during the period of rebate is NET wharfage only. Hence the same cannot be the correct value for discharge of service tax as section 67 mandates discharging service tax on the gross amount charged, i.e., the gross wharfage charged. By contending that service tax has been correctly discharged, GMB is trying to equate NET with GROSS which is illogical and unacceptable. 5.1.5 Another argument, raised by the GMB during the hearing before the honourable Bench was that the Department is seeking to include the cost of the jetty for calculating the service tax payable. A host of case laws and statutory provisions of the laws prevailing in Australia, New Zealand, etc., were cited in support of the contention that Department cannot seek to levy service tax on the cost of jetty. This argument of M/s. GMB merits to be simply disregarded on the following ground: The Department's case is simp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... general cargo and berthing and mooring charges, are part of port services. The Larger Bench of the Tribunal, in the case of Western Agencies Pvt. Ltd. v. Commissioner of C. Ex., Chennai [2011] 22 STR 305 (Tri-LB), while deciding about the scope of port services, has observed as under, in para 11 of its decision: . . . 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. By whatever name such services are called is not material to the charging provision of the 1994 Act. When the service is not provided in any manner is in relation to vessels or goods that serve purpose of the port and taxable. Legislature under the provisions of the 1994 Act, thoughtfully by necessary implication, to avoid exercise of classification of cluster services provided by a port or other port under various nomenclatures intended to bring entire cluster of services under one class of 'port services' except to the extent of different classifications recognized by the 1994 Act. Accordingly, any service provided by a 'Port' or 'other port' fall under one cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... queue is in the nature of reward and cannot be considered to be port service. ... As against above, the Commissioner has referred to definition of port service, as appearing in section 65(82) of the Finance Act, 1994 which means service rendered by a port or any person authorised by the port, in any manner, in relation to a vessel or goods. Inasmuch the vessel priority income and dispatch money is in relation to the vessel, being rendered by the appellant-company, the same would fall under the port service. In view of the above factual and legal position, the contention of GMB on this issue needs to rejected. 5.3 There was no non-disclosure or suppression of facts: (a) The appellants has never disclosed the facts regarding the agreement entered into between the appellant and M/s. L T. Similarly, the fact of rebate/concession granted to the licencee in respect of the wharfage charges was also never brought to the notice of the Department. The facts came to the knowledge of the Department only when the records of GMB were audited. In today's era of self-assessment, the Department is not privy to the private records of the assessee unless the records are requisiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven Government Departments make the payments for the services received from another Department. Telecommunication Department used to provide telecommunication services to other Departments and other Departments paid for the telecom services rendered and even for the services rendered by Railways, Postal and other Departments, payments are made. Therefore, the fact that the appellant is a wholly owned Government company, does not mean that they need not have to follow the law of land or take it lightly and plead ignorance of law or being a wholly Government company, seek differential treatment. The fact remains that the appellant was required to declare the income received once the law was amended and they were required to seek clarification, if there was doubt. Even if they felt that the activity did not attract service tax, ST-3 returns should have been filed/or Department addressed intimating that these services are not liable to tax. In this case, the submission made by the learned Authorised Representative that plea of bona fide has to be considered in the light of decision of the Tribunal in the case of Spie Capag S.A. v. Commissioner of Central Excise, Mumbai [2009] 243 ELT 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for reimbursing the cost incurred in the development of the jetty. In view of the above, there was clear non-disclosure and suppression of facts with an intention to evade payment of service tax. (c) Another contention raised by the appellant was that there are decisions to support their case that no port services were provided by them and, hence the charge of suppression cannot be upheld against them. This is a fallacious argument as, during the material time, GMB not only believed that they were providing port service to M/s. L T, but they actually collected service tax from L T and paid to the Government. They could also not cite any decision contemporaneously given, to support their argument. The honourable Tribunal in the case of Mahavir Plastics v. Commissioner of Central Excise, Mumbai [2010] 255 ELT 241 (Tri-Mum) has held that judicial decisions rendered after impugned period of dispute cannot be relied upon as basis for formation of bona fide belief. (d) The following decisions hold that blind belief cannot be cited as excuse for bona fide belief:- (i) Winner Systems v. Commissioner of Central Excise Customs, Pune [2005] 191 ELT 1051 (Tri-Mumbai) (ii) Tanz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant's case that whatever service tax was short-paid by the appellants is available to them as credit. Hence, this argument of the appellants regarding revenue neutrality does not hold water. We have considered the submissions made at length by both sides and also have taken on record the written submissions made by both sides. Essentially, the entire issue revolves around whether the appellant herein is required to pay the differential service tax liability on the amount of ₹ 80 which was considered by M/s. GMB and M/s. Unitech Ltd. as rebate and the Revenue authorities considered as additional consideration received by the appellant from M/s. Unitech Ltd. The undisputed facts are that the appellant herein being a Maritime Board constituted under the Gujarat Maritime Policy of Government of Gujarat has sovereign rights over the waterfront of the entire coast of Gujarat State. The ownership of the said waterfront vests with Gujarat Maritime Board. In respect of certain waterfronts, the appellant has developed them into ports with proper infrastructure at its own cost and whosoever using the same, the appellants charges ₹ 100 per ship on account of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... July 1, 2010, it can be seen that a service could be considered as a port service if it satisfied the following two conditions:- (i) Service should have been rendered in relation to a vessel or goods. (ii) Service should have been provided by port, other port, or person authorised by port. 8.3 In the present case, neither of the above two conditions is being fulfilled. Except for the ownership of the waterfront, GMB had no role to play. The entire port with infrastructure was built by M/s. UCL Ltd. and would be owned and operated also by M/s. UCL Ltd. under BOOT scheme. Thus, no service of whatsoever nature has been rendered by GMB, which may fall under the category of port service. No service has been rendered by them in relation to a vessel or goods. Just because ₹ 20 has been charged by GMB from M/s. UCL Ltd. under the head wharfage charges and GMB has paid service tax on the same under the category of port service, it cannot be said that the service rendered, if at all, by GMB was a port service. There is no estoppel against the law. 8.4 As mentioned above, except for the ownership of waterfront, GMB does not own anything. The port and the infrastructure ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Ram Gopal Bysack v. Nurumuddin [1893] 10 ILR 20 CAL 446. In Shibu Haldar v. Gupi Sundari Dasya ILR 24 CAL 449, it was held that suit for the rent of the fishery was a suit for immovable property. In Sitaram v. Petia AIR 1917 Nag 37, it was held that right of fishing is recognized as an interest in immovable property. 8.11 In the light of the above judgments, it can reasonably be concluded that allowing the user of the water front by M/s. GMB to M/s. UCL Ltd. was allowing the use of immovable property by GMB to M/s. UCL Ltd., and hence, ₹ 20 charged by GMB to M/s. UCL Ltd. at the most was on account of renting of immovable property. Just because the said charge were linked to the number of ships, it will not convert the same into port charges because basis of quantification or measurement is not relevant while deciding on the nature of the charges. 8.12 The charges levied by GMB in case of other ports cannot be compared with the present case since in case of other ports entire investment, for constructing the port and infrastructural facility was spent by GMB and port was being operated by GMB and hence, the charges levied by GMB were in relation to the vessel or good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Finance Act, 1994 is with reference to the amount actually paid for the services. This is akin to the concept of transaction value which is now the method of valuation followed both in the Central excise as well as Customs Acts. The definitions extracted above make it clear that tax is required to be paid on the amount that is actually paid by one party to another. Such actual payments can be made by any acceptable modes of payment such as cheque, currency, promissory note, letter of credit, draft, pay order, traveller's cheque, money order, postal remittance or other similar instruments. Also, payments made by way of deduction from accounts or by issue of credit notes, debit notes or book adjustments are also regarded as forms of payment. Applying the definitions of gross amount charged and money to the present case, it is evident that the only amount received by GMB is the amount equivalent to 20 per cent. of the usual wharfage charges, as the remainder 80 per cent. was rebate or a discount offered by GMB. 9.3 It is not in dispute that the remainder amount which was offered as rebate was not paid back to GMB either as deduction from account or credit note or de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Privy Council in the case of Raja of Venkatagiri v. Sri Krishnayya Rao Bahadur AIR 1948 PC 150, interpreted the words at the desire of the promisor appearing in section 2(d) of the Contract Act, 1872 held that where the monies were advanced not as a result of the desire of the promisor who executed the promissory note, the same cannot constitute consideration for the promissory note. As such, applying the ratio of this decision, it will flow that since the construction of the jetties by the user industry was not at the request or desire of GMB but by the company's own volition, such expenditure would not constitute consideration. This is clear from the definition of consideration in section 2(d) of the Contract Act, which reads thus: (d) When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise. 9.6 Even if the capital expenditure incurred for development of waterfront is regarded as construction , the next logical question that will arise is whether the enti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inance Act, 1994 or in the Rules framed thereunder. In this regard, the judgment of the Supreme court in the case of Commissioner of Income-tax v. B.C. Srinivasa Setty [1981] 128 ITR 294 (SC) is relevant, which provides that where a taxing statute does not provide or prescribe a machinery provision, in the absence of such machinery provision to cover a particular type of transaction, it is the absence of such a machinery provision itself sufficient indication that the Legislature did not intend to tax that transaction. Though the judgment was rendered in the context of the Income-tax Act, 1961, the principle arising therefrom is equally applicable in the present situation where there is no method available to determine the present value of a contingent benefit which may or may not accrue to GMB at a future date. 9.7 The Revenue's case is even otherwise illogical and absurd as it seeks to assess the services rendered by GMB with reference to the normal wharfage charges which it recovers from users at the full-fledged ports developed and operated by GMB, such as the Kandla Port. This is clearly illogical as in the present case the service rendered by GMB was limited and confin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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