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TMI Blog2019 (3) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... as been authorised to undertake various activities including pilotage and for this purpose, they need a licenced pilot. Therefore, the requirement under section 65(105)(zzl) that the services must have been rendered at Port or by a person authorised by the Port, is fulfilled. In this case is appellant, authorised by the Port has rendered the services. Thus, the appellant was fully liable to pay service tax on the pilotage charges which they received from their customers under the head Port Services , under section 65(105)(zzl) of Finance Act, 1994 - the demand of service tax on port services on the pilotage charges received by the appellant are upheld and any amounts which they must have already paid will be adjusted against the same, but the amounts need to be recomputed reckoning the amounts they received as cum tax amounts. Time limitation - Held that:- The appellant has definitely violated the conditions of the Act and Rules and has not paid the service tax. The benefit of not paying the service tax is evident. Therefore there is no force in the argument that they have not violated any provisions of Act with an intent to evade payment of service tax. Jurisdiction - Held that:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of ₹ 19,33,00,000/- of taxable services i.e. 'Port Services' rendered by them during the aforesaid period. The amounts in question were received by them as pilotage charges. The appellant contested the demand both on merits and on limitation. After following due process, Ld. Adjudicating Authority confirmed a demand of ₹ 1,79,53,285/- towards service tax and an amount of ₹ 2,69,881/- towards education cess. He allowed deduction of ₹ 42,44,476/- towards service tax and ₹ 84,890/- towards education cess which they have already paid at Gurgaon through T.R. 6 Challan. He also confirmed recovery of interest under section 75 of the Finance Act and imposed a penalty of ₹ 1,38,93,799/- under section 78 of the Finance Act, 1994. He also imposed penalty of ₹ 100/- per day upto 17.04.2006 and @ 2% of the amount confirmed per month from 18.04.2006 till the payment of the confirmed amount. He further imposed a penalty of ₹ 1,000/- under section 77 of the Finance Act, 1994 for their failure to take registration of the service tax for the Port Service. It is the case of the Revenue in their appeal No. ST/625/2008 that the amount of penalty impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , they were only users of port facility. The show cause notice relies on the letter No. P3/397/96, dated 05.07.1996 issued by Port Officer, Kakinada intimates that they were permitted by the Kakinada Port Authority to carry out the berthing and tanker vessels at SBM and loading of crude oil into the tanker vessels. The letter in question does not authorise them to provide port services to the vessels. It only authorises them to carry out berthing and mooring operations. Therefore, they are not liable to pay service tax on these services. 5. They were not providing any port services and arranging for certain services through third party contractors for the buyer's vessels. The letter of agreement between them and their clients merely provides that they shall arrange for tag assistance, pilotage etc. for movement and positioning of the vessels at the Port. 6. It was never the intention of the parties that the appellants shall themselves provide such services. Therefore, they are not liable to pay service tax. 7. The amount received by them under the head "pilotage revenue" was in the nature of reimbursement of costs and not in the nature of consideration for any service. Even if i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95 (S.C) Anand Nishikawa Co. Ltd. 2005(188)ELT 149 (S.C) PUshpam Pharmaceuticals Company 1995(78)ELT 401 (S.C.) Pragathi Concrete Products Pvt.Ltd. 2015(322)ELT 819 (S.C). Nizam Sugar Factory 2006(197)ELT 465 (S.C.) ITW India Limited 2009(14)STR 826 (Tri.-Bang.) TATA Consultancy Services Limited 2018 (18)GSTL 478 (Tri.-Del.) Pepsi Foods Limited 2010(260)ELT 481 (S.C) Hindustan Steel Limited 1978(2) ELT (J 159) S.C.) Shreenath Motors Pvt. Ltd. 2018-TIOL-2051-HC MUM-ST Secretary, Town Hall Committee 2007(8) STR 170 (Tri.-Bang.) Intercontinental Consultants & Technocrats Pvt. Ltd. 2018(10(GSTL 401 (SC) Malabar Management Services Pvt. Ltd. 2008(9) S.T.R. 483 (Tri.-Chennai) 8. Ld. DR reiterates the findings of the lower authority and asserts that the impugned order was correct except to the extent of reducing the mandatory penalty payable under section 78. It is his assertion that Ld. Commissioner should not have to reduce the penalty under section 78 which is equal to the amount of service tax. On the question of inapplicability of Major Port Trust Act, as claimed by the appellant at the time of stay application, he points out that Maj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The issue to be decided is whether the appellant is liable to pay service tax on Port Service as per Section 65(105)(zzl) in respect of the services rendered by them in Ravva Port with permission of the Port Authority. Upto 22.06.2010, 'Port Services' under Section 65(105)(zzl) were the services "provided to any person by other port or any port authorised by that port in relation to port services, in any manner". Port services were defined in Section 65(82) as "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." In several specific cases, the Tribunal took a view that services rendered cannot be called port services for the following reasons: (a) Where services were rendered by a person with permission of the Port authority in a major port but that such permission cannot be called 'authorisation' under the Major Port Trusts Act. (b) Where services rendered were of the nature such as stevedoring where it was held that 'stevedoring' is not the activity of the Port and even if the Port Authority authorises, someone to do stevedoring, it cannot be called 'Port Services'. (c) Where the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RTMENT --- From To Capt. D. Satyanarayana M/s Command Petroleum (India Port Officer I/c Pvt. Limited, KAKINADA 533 007. Willington Plaza, 2nd floor, Andhra Pradesh 90, Anna Salai, MADRAS-2 Letter No. P3/397/96 dated 5.7.1996 Sir, Sub: RAWA PORT - Handling of Crude Oil at Single Point Mooring at Rawa Oil Fields by M/s Command Petroleum (India) Pvt. Ltd. - Permission accorded. Ref: 1) G.O.Ms. No. 19,TE&B (P) Department, dt. 30.01.96. ___ As discussed with Mr. Peter Jarvis, Production Manager, Rawa Development on 2.7.96, regarding the tanker vessel berthing at single point mooring and loading of crude oil into tanker vessel at Rawa Port you are permitted to carry out berthing and loading operations subject to the following conditions. 1. Berthing and mooring of the vessel shall be done under the direct supervision of a pilot holding a licence issued by Government of India for pilotage. 2. The vessel shall comply with the tanker safety regulations fire, environmental pollution regulations. 3. The inert gas system pressure vaccum valves, fire pumps and mains shall be in good working condition and to the satisfaction of the inspecting officer of the department. 4. Em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are fully familiar with the contours of the under-sea surface and the traffic and accordingly pilot ships into berths. When the ship has to leave the Port, they similarly pilot it back to the main sea. When the ship reaches about a kilometer or so from the Port, the pilot guides it and two tugs push it from behind into the berth. The process is reversed when the ship leaves the Port. This activity has been undertaken by the appellant with authorisation of the Port and they have received charges for the same. They have credited these amounts in their accounts as pilotage charges. It is their contention that they get the job done through somebody else. It is not necessary for any service provider to perform himself all the tasks, he may perform through his employees, through sub contractors of other agents etc. What is important is whether he is the one rendering the services to the client and getting paid for the same. It is a different matter if the services are rendered by somebody else and appellant have paid to that person and has only sought reimbursement from their customers. In this case, the appellants were authorised to undertake pilotage and not somebody else. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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