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TMI Blog2019 (3) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... e charges as to whether these are the charges levied by the Indian Railways and only collected by the appellant and transferred to the Railways or only collected by the appellant from the client on their own, it is deemed to be a fit case to be remitted back to the original authority for determining as to who is service provider, what is the nature of service and who is the client paying the service charge. Royalty which they received from terminal operator with whom they entered into a contract on Build-Operate-Transfer basis (BOT) - Held that:- The service tax is proposed to be levied on the amount paid by the container terminal operator to the appellant as a part of the BOT agreement in which the appellant performs some services and the container terminal operator performs some other services. The question is whether such an arrangement would amount to container terminal operator using the franchise of the appellant and consequently, whether the royalty charges being chargeable to service tax under franchise services at the hands of the appellant or otherwise. Time limitation - Held that:- The appellant is an organisation under the Government of India and it is extremely d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant that these services are excluded by virtue of Sec.99 of Finance Act, 1994 read with notification 43/2012-ST dated 027.07.2012 which reads as follows: Notification No.43/2012-ST dated 2-7-2012 In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act), the Central Government on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services of the description mentioned in the Table below, provided by the Indian Railways from the whole of Service Tax leviable thereon under section 66B of the said Act, with effect from the date of publication of this notification in the official Gazette, up to and including the 30th day of September, 2012. TABLE Sl. No. Description of taxable services 1. Service of transportation of passengers, with or without accompanied belongings, by railways in (A) First class; or (B) An air conditioned coach 2. Services by way of transportation of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant from trade do not form expenditure within the meaning of Rule 5(1) of Service Tax Valuation Rules and therefore should form part of the taxable value. Royalty charges: 5. The appellant licensed M/s Visakha Container Terminal Pvt Ltd to construct a wharf and install equipment on the existing wharf to provide port services to end customers and the appellant was maintaining all necessary infrastructures such as dredging, piloting, hauling, rumoring of vessels etc. for smooth service by M/s Visakha Container Terminal Pvt Ltd within the port. M/s Visakha Container Terminal Pvt Ltd have used the name and brand of the appellant and have been paying royalty charges to the appellant. Therefore, according to Revenue, this amount is chargeable to service tax under the head of franchise services . In the order of the Tribunal Chennai in the case of Tuticorin Port Trust [2016 (42) STR 512], on an identical case, it has been held that the royalty charges collected by the port from the terminal operator as per the BOT agreement is chargeable to service tax under port services. Learned Chartered Accountant for the appellant submits that in their specific case the agreement b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant from the Indian Railways for the services provided to the latter. We, therefore, find no force in the argument of the appellant that their service should be considered as service provided by the Indian Railways and hence should be treated as exempted under Sec.99 of the Finance Act and under Notification 43/2012-ST dated 2-7-12 both of which clearly excludes services provided by the Indian Railways. These exemptions cannot be extrapolated to services received by Indian Railways also. At this stage, it would be proper to examine the scope of the term port services under Sec. 65(82) of the Finance Act, 1994. This section defines port service as any service rendered by a port or other port or any person authorized by such port or other port in any manner in relation to a vessel or goods. Port has been defined as a major port under Major Ports Act, 1963. Other port has been defined as a port under Indian Ports Act, 1908 other than major ports. The term authorized has not been defined in the Finance Act, 1994. In view of the conflicting decisions in this regard the following issues were referred to the Larger Bench. i. Whether an interpretation of the term port service in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Mad), the Hon ble High Court of Madras upheld the above judgment of the Larger Bench. We also find that the Hon ble Apex Court in the case of Dilip Kumar Co. and others (Civil Appeal No.3327/2007) held that one has to look merely at the words clearly stated and that there is no room for any intendment nor presumption as to tax. It is only the letter of the law and not the spirit of the law to guide the interpreter to decide the liability to tax ignoring any amount of hardship and eschewing equity in taxation. Thus, we may emphatically reiterate that in the event of ambiguity in a taxation liability statute, the benefit should go to the subject/ assessee. But in a situation where a tax exemption has to be interpreted, the benefit of doubt should go in favour of the revenue. The court further observed that in applying rule of plain meaning any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. This is especially so in fiscal statutes. Nevertheless, if the plain language results in absurdity the court is entitled to determine the meaning of the word in the context in which it is used keeping in view the legislative pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of wagons. As such a sum is also liable to service tax on par with service tax on wagon hire and haulage charges already being discharged by the notice. In view of the lack of clarity of the nature of demurrage charges as to whether these are the charges levied by the Indian Railways and only collected by the appellant and transferred to the Railways or only collected by the appellant from the client on their own, we find it is a fit case to be remitted back to the original authority for determining as to who is service provider, what is the nature of service and who is the client paying the service charge. Royalty charges: 12. As far as the royalty charges are concerned, service tax is proposed to be levied on the amount paid by the container terminal operator to the appellant as a part of the BOT agreement in which the appellant performs some services and the container terminal operator performs some other services. The question is whether such an arrangement would amount to container terminal operator using the franchise of the appellant and consequently, whether the royalty charges being chargeable to service tax under franchise services at the hands of the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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