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TMI Blog2016 (6) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... read with Section 70 of Finance Act, 1994. 2.1 The impugned order has inter alia held that the respective services provided by the appellant during the period of April 2004 to March 2007 within the Port area are to be classified under the category of port services as covered under the definition of Section 65(82) of Finance Act, 1994. The appellant was granted complete waiver of pre-deposit of the demand amounts confirmed in the impugned order vide Stay Order No.44/2009 dated 21.9.2009 passed by this Tribunal. 2.2 Thereafter Revenue filed the writ petition challenging the above Stay Order dated 21.9.2009 before Hon'ble High Court of Karnataka. The Hon'ble High Court of Karnataka vide its Order dated 25.2.2012 in Writ Petition No.13152 of 2009 (T-TAR) rejected Revenue s writ petition and remitted the matter to the Tribunal for consideration on merits in accordance with law. 3. The appellant has been represented by the Sr. Advocate, Mr. K. S. Ravi Shankar. The appellant in its appeal and learned Sr. Advocate during the hearing held on 6.6.2016 has inter alia argued as follows: Demand under Goods Transport Agency: (i) To attract levy of service tax under the category of goods tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue as 15% of the gross amount received from their clients, since there is no separate break-up in respect of the amount collected, towards service charges. The appellant submits that they are discharging service tax by adopting the above value as per guidelines/clarifications provided in the Trade Notice No.39/97-CE (Service Tax 39)/97 dt.11.6.1997 at para 2.5. The appellant herewith reproduces para 2.5 of the Trade Notice for convenience of reference: "In many cases the custom house agent undertakes turnkey imports and exports where a lump sum amount is charged from the client for undertaking various services. In these cases, the lump sum amount covers not only the agency commission fee but also other expenses and no separate break-up is given in respect of these expenses. It has been decided that in such cases, the value of the taxable service tax shall be 15% of the lump sum amount charged to the client. The customs house agents, may be advised to show the service charges as 15% of the such lump sum amount of the bills. Service tax of 5% will be chargeable on the above 15%. Board has also issued clarification vide F. No.B.43/1/97-TRU dated 6.6.97 to the same effect." (vi) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The appellant submits that the New Mangalore Port Trust had issued a Certificate in Reg. No.3/2003 to transact Clearing & Forwarding business in the port. The appellant submits that the Mangalore Port has granted certificate for the limited purpose of carrying on clearing and forwarding, custom house agent and stevedoring activities and not-repeat not for carrying on port services . The appellant submits that the appellant was issued with stevedoring licence as per the provisions of NMPT (licensing of stevedoring) Regulations of Major Port Trust Act, 1963. The stevedoring license being granted to CHA would not imply that the CHA becomes a port, just as license to practice medicine given to a doctor would not make the doctor the medical council. The appellant submits that the impugned order has grievously erred in holding that the certificate granted by the Manager Port is to carry on the activity of Port Services. (ix) The appellant submits that the Respondent has purportedly bifurcated the taxable value of alleged port service and CHA Service without basis. The appellant submits that the respondent relied on para 5 of Board Circular F. No.B/II/1/2002 TRU dated 1.8.2002 and held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard to its obligation. (xv) The appellant submits that no penalty could have been imposed for the reasons that there is no liability to differential tax and there is neither culpable mental state nor mens rea. The appellant relies on the following decisions in support of their contention: a. R.B. Bahutule vs. CCE: 2004 (166) E.L.T. 233 (TR). b. Mohan Industrial Security Services vs. CCE: 2002 (139) E.L.T. 722 (T). 3.1 The learned Sr. Advocate has further mainly relied upon the CESTAT, Bangalore s decision in the case of Aspinwall & Co. Ltd. vs. CCE: 2011 (21) S.T.R. 257 (T) saying that entire facts of the case are similar to that of one of the appellants in the said case viz., Alvares and Thomas vs. Commissioner (Appeal No.ST/442/2008) which have also been discussed in the said Order in para 5. He argued that prior to 1.7.2010, when the definition of port services was amended, the present appellant is not liable to pay any service tax under the category of port services . He also referred to the decision of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. within the port area of Mangalore Port and Karwar Port. It is also undisputed that the appellants herein had taken the Service Tax registration under the category of CHA or Steamer Agent or C&F Agents. It is also undisputed that the appellants are discharging their Service Tax liability under the category of CHA on 15% of the gross value of the bills raised by them for the services rendered to their customers. Revenue s contention is that the entire amount, which is collected by the appellants from their customers, should be taxed under Port Services . The adjudicating authority, while coming to the conclusion that the appellants herein had rendered the Port services , as in almost all cases, recorded the following findings : 27. The issue relates to classification of services rendered under port services and demand of differential duty. The contention of the service provider is that they are rendering services as Custom House Agent (CHA) and paying service tax under the said category and that they are not authorized but only licensed by Port for providing services inside the Port. Port Services were brought under the Service Tax net with effect from 16-7-2001 and has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng as the contractors utilized by Management Committee for rendering their services are issued licenses or permits by the Paradeep port, it should be treated as authorized by the Port Trust for rendering services in relation to vessels and goods within the port area. On the same analogy, since the service provider are issued with stevedore licence by the NMPT to operate within the port area it cannot therefore be said that they are not authorized by the NMPT for rendering services in relation to vessels and goods within the port area. Port service is expected to be provided by the port or by person authorized by port in any manner. Instead of performing all the services by themselves, port has preferred to perform certain services and permitted/authorized to do the remaining services by stevedore. For example, Section 42 of the Major Port Trust Act, 1963 specify performance of service by Board or other person. Section 42(1) says that a Board shall have power to undertake the following services :- (a) landing, shipping or transhipping passengers and goods between vessels in the port and the wharfs, piles, quays in docks belonging to or in the possession of the Board; (b) receivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Konkan Marine Agencies. Aggrieved by such an order, the appellants preferred an appeal before the Tribunal in appeal No. ST/75/2007, which was disposed of by Final Order No. 884/2007, dated 6-8-2007 as reported at 2007 (8) S.T.R. 472 (Tri.-Bang.). While allowing the appeal filed by the assessee therein, the Bench recorded findings, which, we may respectfully reproduce : 6. We have gone through the records of the case carefully. The point at issue is whether the services rendered by the appellants amount to Port Services and whether they are liable to pay Service Tax in terms of the Finance Act, 1994. We find that the appellants obtained the stevedoring license from the Mangalore Port Trust for carrying out the stevedoring operations. The stevedoring operations actually mean loading and unloading of cargo within the port premises. The Commissioner has interpreted that the appellant is carrying out the services within the port and he has been authorized by the port to render such services in view of the licence given to him. Therefore, he would rightly fall within the ambit of the Port Services . However, when we examined the issue in terms of Section 42 of the Major Port Trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal to the Hon'ble High Court of Karnataka in C.E. Appeal No. 12 of 2008, which was decided by a judgment dated 13-3-2008, which is reported at 2009 (13) S.T.R. 7 (Kar.). In the said judgment, their lordships have recorded the following findings, from which we respectfully reproduce relevant paragraphs: 15. We may further clarify that the definition of port service as found in Section 65(82) of the Finance Act would not be applicable to the facts of the present case. The definition of port service reads as under : Port Service means any service rendered by a port or other port or any person authorised by such port or other port, in any manner, in relation to a vessel or goods. 16. According to the learned Counsel for the appellant since the assessee is a licence holder, therefore he would be the person authorized within the definition of port service as mentioned hereinabove. 17. We do not agree to the aforesaid contentions advanced by the learned Counsel for appellant for the simple reason that definition of cargo handling service as reproduced hereinabove and Section 65(23) clearly puts a bar with regard to the imposition of tax meant for export which also includes h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Port ...... CESTAT, Bangalore s decision in Aspinwall & Co. Ltd. (supra) supports our above stand. 5.3.3 The corresponding taxable port service(s) in this regard have been mentioned in Section 65(105)(zn) and 65(105)(zzl) which were substituted accordingly by the Finance Act, 2010 (w.e.f. 1.7.2010). The said taxable port services in respect of a port and in respect of other port have been defined under Section 65(105)(zn) and (zzl), as follows: Section 65(105) taxable service means any service provided or to be provided- (zn) to any person, by any other person, in relation to port services in a port, in any manner: Provided that the provisions of section 65A shall not apply to any service when the same is rendered wholly within the port; (zzl) to any person, by any other person, in relation to port services in other port, in any manner: Provided that the provisions of section 65A shall not apply to any service when the same is rendered wholly within other port. It is to be noted that definition (meaning) of the taxable services in a port and in other port , both have the similar Provisio, which says that the provisions of Section 65A will not be applicable, when any servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt services, scope of the port service was examined at length by the Tribunal in the case of Homa Engineering Works: 2006 (1) S.T.R 19 (Tribunal) (citation supplied) referred supra. In para 8 of the said judgment, it has been observed that taxable services under the net of Port Service means any service rendered by a port or any person authorized by such port. The services being provided by the appellant are handling, stevedoring, loading, unloading, tug hire and labour arrangement. Admittedly, such services are not required to be provided by the Port under The Major Port Trusts Act, 1963. A perusal of the Section 35 of the said Act, as reproduced in the case of Homa Engineering Works, clearly shows that power of the Board to execute the works and provide appliances do not include the above activities being undertaken by the appellant. As such, it cannot be said that the services being provided by the appellant were covered by the Port services. Further, the Tribunal in the above case has observed that the authorization from the Port must be in respect of the services which the port itself is required to provide as such authorization would make an assessee step into shoes of the Po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd a licence issued under Sec. 123 is clearly understood if the functioning of private container terminals (e.g. P & O) terminal in Navaseva in Mumbai, Visakha Container Terminal at Visakhapatnam etc.) operating in various major ports and some of the berths operated by private persons on BOT basis, is examined. In all these cases where private parties are operating container terminals of berths, the functioning is independent of the ports which has given such authorization and in all such cases they are governed by the scale of rates fixed by TAMP (refer above) under Sec. 48 by way of notifications published in the Official Gazette. Take for instance in Visakhapatnam Port, the Visakha Container Terminal Pvt. Ltd. has been authorized by Visakhapatnam Port Trust to handle the container cargo that is coming to Visakhapatnam Port. Here the TAMP has fixed the scale of rates, under Sec. 48 of MPTA, by way of Notification published in the Gazettes of India (which is mandatory requirement under Sec. 42 of MPTA). The Stevedores and other port service providers, issued with licences by Ports, have not conferred with functional authority as seen in the case of private agencies maintaining con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Port services would come into effect from notified date i.e. after the enactment of the Finance Bill, 2010. The said Finance Bill was passed by the Parliament and the President gave assent to it on 8-5-2010. It would imply that the modified/altered or expanded definition of Port services would definitely encompass the services rendered by the appellants herein, but from 8-5-2010. It is an admitted fact that the relevant period in all these cases is prior to 8-5-2010. Hence, the contentions raised by the counsels for all the appellants that the Finance Act, 2010, has removed the lacuna in the earlier port services, is correct. 18. Hence, in view of the foregoing reasonings, on the merits of the case whether all the services rendered by the appellants would fall under the category of Port services or not, we hold that the services rendered by the appellants would not fall under the category of Port services (emphasis supplied). As the impugned orders are set aside on merits, there can be no case of penalty or interest in respect of this issue. 5.5 Further, we refer to CESTAT, Ahmedabad s decision in the case of Shreeji Shipping vs. CCE, Rajkot: 2014 (36) S.T.R. 569 (Tri.-Ahmd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be subject to service tax under Clause 65(105)(zzm) prior to 1-7-2010, as in no event could the same be considered as airport services under Clause (zzm) of Section 65(105) of the Act. This is so, because letting of immovable property was specifically covered under Clause (zzzz) of Section 65(105) and Section 65A(2) mandates that the sub-clause which provides the most specific description would be preferred to sub-clauses providing a more general description. Indisputably, if the transaction between DIAL and the petitioner is considered merely as letting of immovable property, then by virtue of Section 65A(2)(a) the same would be considered as taxable service under Clause 65(105)(zzzz) and could not be classified as airport services under clause (zzm) of Section 65(105) of the Act. 40. In addition to amending Clause (zzzz) of Section 65(105), the Finance Act, 2010 also brought about an amendment in Clause 65(105)(zzm). However, this amendment was not retrospective and came into effect from 1-7-2010. The said clause as amended by Finance Act, 2010 reads as under :- (105) taxable service means any service provided or to be provided - Xxxx xxxx xxxx xxxx (zzm) to any per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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