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TMI Blog2008 (8) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... lso against demands of service tax on one or more of the following other services viz. "Business Auxiliary Service", "Clearing & Forwarding Agent's Service", "Goods Transport Agent's Service", "Customs House Agent's Service" and "Steamer Agent's Service". The two appeals of the Revenue are for imposing higher amounts of penalty under Section 76 of the Finance Act, 1994 on two of the assessees. 2. Examined the records and heard both sides. The arguments for the assessees were led by Sr. Advocates, S/Sh A.P. Datar and N. Venkataraman and those for the Revenue by the Special Consultant, Shri K.P. Sridhara Raman. The main issue addressed before us was whether it could be held that the assessees' activities (other than stevedoring) within port area, on which service tax was demanded under the head "port services", were to be classified as "port services" under Section 65(82) of the Finance Act, 1994. Counsel argued that, for levy of service tax in the above category, the service should be one rendered by a port or any person authorized by the port in relation to a vessel or goods. Further, it should be a service specified under Section 42(1) of the Major Port Trusts Act, 1963. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view that any service to be classified as "port service" under Section 65(82) of the Finance Act for the purpose of levy of Service Tax should be one specified under Section 42(1) of the Major Port Trusts Act. In the absence of any list of port services specified under the Finance Act, any service rendered within a port area by the Port or by any person authorized by the Port was to be treated as "port service" in terms of Section 65(82) of the Act. He submitted that services such as cargo handling service, transportation of goods, storage of goods etc. rendered within port area would also be appropriately covered under "port services". In this connection, reference was made to the CBEC's Circular No. B11/l/2001-TRU dated 9-7-2001 and Circular No. B11/l/2002-TRU dated 1-8-2002. The ld. consultant further argued that a person who was licensed to render stevedoring service was impliedly authorized to carry out allied/ancillary operations also. In this connection, he referred to the "duties and responsibilities of a stevedore" laid down under the Madras Port Trust (Licensing of Stevedores) Regulations, 1987 made by the Port Trust under Section 123 of the Major Port Trusts Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viding port services to their customers at the ports of Chennai, Paradip etc., (b) that, in respect of the services rendered at Chennai port, they were paying service tax only on stevedoring charges and had not discharged tax liability on intercarting (transportation) charges, equipment hire charges, plot rent, demurrage, cargo weighment charges, despatch money etc. which were collected from customers for the respective services rendered in the port, (c) that, in respect of the services rendered to the Karnataka Power Corporation Ltd. at Talcher, M/s. SICAL had not discharged service tax liability correctly, (d) that, within the Chennai port area, intercarting of cargo from the wharf to the storage point was an activity undertaken in relation to the cargo and, therefore, it fell within the ambit of "port services" and service tax was liable to be paid on intercarting charges, (e) that the activity of blending different varieties of coal within the port area was also a "port service" and, therefore, blending charges were exigible to service tax, (f) that the discharge of cargo from a vessel at the port was certainly a part of stevedoring and, therefore, the incentive (despatch money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of "port service" under Section 65(82) of the Finance Act, 1994 in their own ways. This definition reads as under: ""port service" means 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." As per Section 65(81) of the Finance Act, 1994, "port" has the meaning assigned to it in clause (q) of Section 2 of the Major Port Trusts Act, 1963. It is not in dispute that M/s. SICAL's activities, which are claimed to be "port services" by the department, were performed within Madras (Chennai) port limits defined by the Central Government for the purposes of the Major Port Trusts Act. Like or similar activities of the other assessees were also performed within the limits of the respective ports. According to counsel, for the purpose of levy of service tax under the head "port service", the service must be rendered by a Port or any person authorized by the Port and the same should be in relation to a vessel or goods. It has been argued that a Port can render only those services which are specified under Section 42(1) of the Major Port Trusts Act and, therefore, it may authorize any person to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e prior approval of the Central Government, the Board can enter into a partnership or joint venture with any body corporate or with any other person to perform any of the services specified under sub-section (1). With reference to subsection (4) of Section 42, it has been pointed out that no person authorized under sub-section (3) shall charge for the above services any sum in excess of the rates specified by TAMP by Notification in the Official Gazette. No rates were fixed by TAMP for the services, either. Thus it has been argued that any person holding stevedoring licence issued by the Port Trust without previous sanction of the Central Government cannot be considered to be a person 'authorized' under sub-section (3) of Section 42 of the Major Port Trusts Act to perform the activities in question. The assessees were authorized by the ports to do stevedoring only and they paid service tax thereon. Stevedoring covered only loading of goods into a vessel and unloading of goods from a vessel. None of the activities (other than stevedoring) of the assessees, on which service tax was demanded under the head "port services", was mentioned as ancillary operations in the Stevedoring Licen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of services mentioned under clause (e) of sub-section (1) of Section 42 of the Act, reading : "piloting, hauling, mooring, remooring, hooking, or measuring of vessels or any other service in respect of vessels". He argued that the expression "any other service in respect of vessels" was wide enough to cover the assessee's operations on the vessels. On the other hand, the party's counsel argued that the expression should be read ejusdem generis with the specific terms like piloting, hauling, mooring etc. It was pointed out that piloting, hauling, mooring etc. were activities directly connected with the entry or exit of the vessel and, therefore, the expression "any other service" should also be understood as indicating an activity directly connected with the entry or exit of the vessel. The repairing and the other activities carried out by the assessee on the vessels of their customers did not belong to this category and, therefore, the said activities were not covered by the services specified under Section 42(1) of the Act to be performed by the Port or a person authorized by it. Accordingly, it was argued that the charges collected by the assessee from their customers for repair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent cases of New Mangalore Port Trust v. Commissioner, 2006 (4) S.T.R. 448 (Tri.-Bang.), Western (I) Shipyard Ltd. v. Commissioner, 2006 (3) S.T.R. 639 (Tri.-Mum.), BBR (India) Ltd. v. Commissioner, 2006 (4) S.T.R. 269 (Tri.-Bang.), Konkan Marine Agencies v. Commissioner, [2007 (8) S.T.R. 472 (Tribunal) = 2007-TIOL-1853-CESTAT-BANG], Kin-ship Services (India) Pvt. Ltd. v. Commissioner, [2008 (10) S.T.R. 331 (Tribunal) = 2008-TIOL-584-CESTAT-BANG], Mazgaon Dock Ltd. v. Commissioner, 2008 (11) S.T.R. 271 (Tri.-Mumbai) and Western India Shipyard Ltd. v. Commissioner, [2008] 15 STT 371 (Mum.-CESTAT). 10. Against the Tribunal's decision in Velji case, the department's appeal was dismissed by the apex court by judgment dt. 24-3-2008, which reads as follows :- "The Tribunal, relying upon its own decision in the case of M/s. Homa Engineering Works v. CCE, Mumbai, has allowed the present appeal filed by the assessee. Against the aforesaid case in Homa Engineering Works v. CCE, Mumbai, Revenue has not filed any appeal in this court. In view of this, this appeal is dismissed. No costs." As rightly submitted by the ld. Special Consultant for the Revenue, the above judgment of the Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the respective port areas on the strength of licences issued by the Port authorities, and they have no case that they had been undertaking the said operations unauthorizedly. They can only be held to have been authorized by the Port authorities to undertake such operations/services. In Velji case, the party did not plead that their operations in the port area were unauthorized, nor was anything found to this effect by the Bench. For all these reasons, we do not think that the decision in Velji case or any of the subsequent decisions, which followed the ratio decidendi of Velji, is a good precedent for the present batch of appeals. 12. The ld. counsel for the assessees have exhaustively referred to various provisions of the Major Port Trusts Act, 1963 and the provisions of the Madras Port Trust (Licensing of Stevedores) Regulations, 1987 as also to the rates prescribed by TAMP in their bid to restrict the scope of "port services" under Section 65(82) of the Finance Act, 1994 to stevedoring. However, the fact is that some of the assessees have since started paying service tax on the ancillary services by classifying these services as "port services" under Section 65(82) ibid, pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defined under Section 65(82) ibid ? Certainly, the law of service tax cannot be expected to have envisaged such an anomalous situation. It is a cardinal principle of statutory interpretation that, when the language of a statute is capable of two interpretations, one of which is reasonable and the other unreasonable, the court should hold that the former must prevail. The definition of "port service" given under Section 65(82) of the Finance Act, 1994 is referable to both major and minor ports, not by reason of identity of service but by reason of identity of port. While the Major Port Trusts Act specifies certain services to be provided by the Board of Trustees of the Port or by a person authorized by them, the Indian Ports Act does not so specify. Therefore, if the meaning of "port services" defined under Section 65(82) ibid is gathered from the former Act, it is bound to lead to absurd results for minor ports. An interpretation leading to such results is unreasonable and cannot be resorted to. Therefore, in our view, it would be prudent to hold that the scope and ambit of "port services" defined under Section 65(82) of the Finance Act, 1994 should be found out without reference t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65. When these operations are done in a 'port' or 'other port', they become "port services" classified under clause (82) of Section 65. Applying Section 65A(2)(a) to this case, cargo handling service provided by any person within the limits of a major or minor port shall have to be classified as "port service", being more specific in relation to port. Thus, by strict construction of the provisions of the Finance Act, 1994 as advocated by the ld. counsel, we think, we are able to decipher the scope of "port service" defined under Section 65(82) ibid and accordingly to fix the tax liability. "Port service" means 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. None of the assessees before us has pleaded that they undertook stevedoring and allied operations in port premises unauthorizedly. It is not open to them to plead so. They would admit that all their operations in port area were duly authorized, for which they have nothing other than stevedoring licences to draw support from. Under these licences read with "duties and responsibilities of a stevedore" laid down under the relevant Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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