Ashok K. Arya

1. The appellant viz., M/s. HML Agencies (P) Ltd., Mangalore is in appeal before this Tribunal against the Order-in-Original No.2/2008 dated 5.2.2008 (passed on 31.1.2008) by Commissioner of Central Excise, Mangalore.

2. The impugned order passed by Commissioner has confirmed the demand of Service Tax of Rs.6,47,51,236/- and Education Cess of Rs.12,07,563/- in respect of the two show-cause notices in terms of Proviso to Section 73(1) read with Section 68 of Finance Act, 1994 and Rule 6 of Service Tax Rules, 1994 along with the interest under Section 75 of Finance Act, 1994 and imposed various penalties under Sections 76, 77, and 78 of Finance Act, 1994 and Rule 7C of Service Tax Rules, 1994 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 servicesas 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 Honble High Court of Karnataka. The Honble High Court of Karnataka vide its Order dated 25.2.2012 in Writ Petition No.13152 of 2009 (T-TAR) rejected Revenues 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 transport agency the appellant must have availed the service of Goods Transport Agent. The appellant had not availed any service of Goods Transport Agent but either they have used their own vehicle in transporting the goods or with respect to few consignments they had availed services of transport owners/operators, hence no liability would arise as per para 149 of the Finance Ministers budget speech of 2004. Rule 2(1)(d)(v) of the Rules does not specify that if the appellant had engaged transportation for an individual then the appellant is liable to pay service tax.

Demand under Customs House Agent Service:

(ii) They were executing turnkey contract and the said contract cannot be vivisected and hence the respondent has erred in vivisecting and demanding service tax on CHA service.

Cargo Handling Service:

(iii) The demand of service tax under Cargo Handling Service is unsustainable as the respondent has bifurcated the indivisible turkey contract into bits and pieces to suit revenue requirements without any basis. It is settled legal position that turnkey contracts cannot be vivisected. The appellant relies on the Tribunals decision in Daelim Industrial Co. Limited vs. CCE: 2003 (155) E.L.T. 457 (T), wherein it was held that turnkey basis contract cannot be vivisected and part of it be subjected to service tax.

Demand of duty under Port Service:

(iv) The respondent has proceeded on an erroneous footing in re-classifying services rendered inside the port as port services and services rendered outside the port under cargo handling services with reference to export of iron ore. The appellant submits that handling shipment of iron ore fine is also an activity of CHA service and the appellant has already paid the service tax under the category of CHA, which fact is not in dispute or doubt. The appellant respectfully submits that at no point of time the appellant has rendered the service of cargo handling or port services. The impugned order is therefore bad in law.

(v) The appellant submits that the respondent has grossly erred in classifying the services under Cargo Handling Service or under Port Service. The appellant submits that they had obtained registration under the category of Custom House Agent bearing registration No.CHA/MNG/01/2002 HML and are carrying on business as Custom House Agent and discharging the service tax by determining the taxable value 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 commissionfee 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 appellant submits that the taxable service definition of port services as in Section 65(105)(zn) per se cannot be made applicable to the facts of this case for the reason that the appellant was not authorised by the Port Trust to render port service. The appellant submits that as per the taxable service definition port service means any service provided to any person, by the port or any person authorised by the port in relation to port services in any manner.Accordingly the person must be authorised to do the port service. The person authorised by the port to do any other service other than port service cannot be interpreted in such a manner that he is authorised to do the port service. The respondent has wrongly interpreted the definition of taxable service as defined in Section 65(105)(zn) for the purpose of levy of service tax under the category of port services. The respondent has enlarged the meaning of port services to hold that any service by an authorised person in any manner in relation to vessel or goods can be construed as rendering of service under the category of port services.

(vii) The appellant would rely on the following Tribunal decisions in support of their contention that their activities do not attract tax under port servicesand that they have discharged service tax in accordance with law.

a. Homa Engineering Works vs. CCE: 2007 (9) S.T.R. 373 (T), wherein it was held that repair of vessels at dock by contractor for its customer, was not port service by a person authorised by the port.

b. Velji P. Sons (Agencies) P. Ltd. and Anr. Vs. CCE: 2007 (8) S.T.R. 236 (T), wherein it was held that service provided by CHA would not fall under the port service category. This case was affirmed by Apex Court and reported in 2008-TIOL-68-SC-ST.

c. Konkan Marine Agencies: 2007 (8) S.T.R. 472 (Tri.-Bang.) wherein it was held that handling services and stevedoring operations would not fall under port services; and export cargo would not come under cargo handling service The departmental appeal was dismissed by the Honble High Court of Karnataka in CEA No.12/2008 dt. 13.3.2008.

d. CCE vs. Laxmi Trading Co.: 2008-TIOL-68-SC-ST, wherein it was held that the contract was for transportation of limestone and the loading/unloading was only incidental and therefore the activities were not covered under the category of cargo handling service.

(viii) 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 Servicewithout 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 that the appellant is rendering port service. The appellant submits that at no point of time they had rendered port services as held in the impugned order but in fact they have received the services from port authorities for which service tax has been charged by the New Mangalore Port Trust and the same was paid by the appellant.

(x) Entire demand of Revenue is clearly barred by limitation. The demand of service tax in the impugned order is an attempt to justify the unjustifiable stand of the revenue, and the finding of suppression of facts with intent to evade tax with a view to invoke the extended period and penalise the appellant, are legally untenable.

(xi) The department had registered the appellant under the category of CHA as early as during 2002, and a sudden shift in stand cannot be retrospectively made, to saddle the appellant with a fantastic tax liability for reasons best known to the revenue and unknown to the appellant. The appellant submits that if the appellant was not a CHA, nothing prevented the revenue from refusing to register them under that head, assess them under that category, accept their returns under the said head, audit them under that head, accept taxes on service of CHA.

(xii) All material facts were within the knowledge of the Department from the inception as the appellant was a registered assessee since the year 2002, and were paying tax and filing returns as prescribed by law and the appellant was subjected to audits and adjudication in the past.

(xiii) The appellant submits that when service tax itself is not payable, the demand of interest would automatically fail. The appellant relies on the Supreme Court decision in Pratibha Processors vs. UOI: 1996 (88) E.L.T. 12 (SC), wherein it was held that interest is an accessory of the principal (tax) and if tax fails interest also fails automatically.

(xiv) The appellant submits that there is no finding or any evidence to prove culpable mental stateor mens rea attributable to the appellant. The appellant submits that there is not even an iota of evidence brought on record against them, to establish that they had acted contumaciously, dishonestly or in deliberate defiance of law. Therefore, the penalty imposed on them is opposed to the Supreme Court decision in Hindustan Steel Limited vs. State of Orissa: 1978 (2) E.L.T. J.159 (SC), wherein it was held that penalty will not 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, Bangalores 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 Honble Delhi High Court in the case of Airport Retail Pvt. Ltd. vs. UOI: 2014 (35) S.T.R. 659 (Del.). He again submitted that the facts in their case are similar to the appeal No.ST/442/2008 filed by M/s. Alvares & Thomas against CCE, Mangalore, which was decided by the common decision in Aspinwall & Co. Ltd. (supra), wherein it was held that services rendered by the said appellant viz., Alvares & Thomas do not fall under the category of port services.

3.2 The learned Sr. Advocate further mentioned and relied upon the following case laws:

(i) Velji P. & Sons (Agencies) P. Ltd. vs. CCE: 2007 (8) STR 236 (T) affirmed by Supreme Court 2009 (13) S.T.R. J31 (SC).

(ii) Lotus Shipping Ltd. vs. CCE: 2015 (38) S.T.R. 1148 (T)

(iii) Airport Retails Private Ltd. vs. UOI: 2014 (35) S.T.R 695 (del.)

(iv) Delhi International Airport P. Ltd. vs. UOI: 2015 (37) S.T.R. 3 (SC)

4. The Revenue was represented by learned AR, Shri Pakshirajan, who reiterated the findings given in the impugned order.

5. We have carefully gone through the facts on record as well as the submissions of the appellant and the Revenue in detail along with the case laws cited.

5.1 The appellant viz., HML Agencies Pvt. Ltd. has been providing in addition to CHA services other services in the category of transportation of goods by road, cargo handling service, stevedoring, clearing and forwarding, etc., in the port area. The services which were being provided by the appellant in the port area and which were provided on the strength of consolidated contract by the appellant have been held to be under the classification of port servicesin terms of Section 65A(2)(b) of Finance Act, 1994 by the impugned order.

5.2 The CESTAT Bangalore in its decision in the case of Aspinwall & Co. Ltd. (supra) has analysed similar facts in case of one of the appellants therein viz., Alvares & Thomas. In this regard, we refer to the discussions and observations of CESTAT Bangalore made in the said case. The said decision, in its para 12, refers to the facts similar to the facts present in this appeal. We, therefore, are reproducing para 12 and further paras from the said decision below:

12. The undisputed facts in all these cases are that the appellants herein were holders of Stevedoring Licence and in few cases were also rendering the activity of handling shipment of iron ore, granite blocks, aluminium, 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. Revenues 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 servicesand 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 defined in Section 65(82) of the Act.

As per the definition, port service means -

(i) any service in relation to a vessel or goods, and

(ii) provided by port, other port or a person authorised by port or other port.

The services rendered by the port or a person authorized by the port are not defined in the Act. Therefore, any service rendered within the port premises by the port or by any person authorized by the port is to be treated as Port Service. The Service provider is issued with a Stevedoring Licence and Clearing & Forwarding Agency Licence by NMPT to perform stevedoring operation within port premises. No stevedore shall be allowed to work on board any vessel in the port except with stevedore licence issued by the port.

28.The issue to be decided here is whether the above services rendered within the port are to be treated as Port service. The service providers contention is that though the services are rendered within the port premises it cannot be treated as Port Services as port has not authorized them to render such services. It is not disputed that the service provider is licensed and permitted to render stevedoring service. Port is a notified area and does not provide free access to general public. For entry into the port premises, Port Trust has specified certain restrictions. Rendering of any service within the port would be possible only with permission or authorization issued by the Port. The service provider has obtained a stevedore licence from the Port Trust, for rendering stevedore service. All the services within the port are either required to be done by port or by persons permitted/authorized by the port. A person who is licenced or authorized to render stevedore service is also authorized to render other allied and ancillary operations as evident from the nature of service rendered by the service provider. The statutory definition under Section 65(82) says that port servicesmeans 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. So the emphasis here is on the person authorized and not on the service authorized.

30.In the above mentioned clarification even though Management Committee at Paradeep Port is not authorized by the port for rendering its services within the port, yet it was considered by the Board that as long 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) receiving, removing, shifting, transporting, storing and delivering goods brought within the Boards premises;

(c) carrying passengers by rail or by other means within the limits of the port or port approaches, subject to such restrictions and conditions as the central government may think fit to impose;

(d) receiving and delivering, transporting and bookingand dispatching goods originating in the vessels in the port and intended for carriage by the neighbouring railways, or vice versa, as a railway administration under the Indian Railways Act, 1890 (9 of 1890)

(e) piloting, hauling, mooring, remooring, hooking, or measuring of vessels or any other service in respect of vessels

(f) developing and providing, subject to the previous approval of the Central Government, infrastructure facilities for ports.

31.Thus, removing, shifting, transporting, storing or delivering goods brought within the port premises are either to be done by Port or by any person authorized by the port. Since transporting, removing and shifting of goods are not done by NMPT, the service provider performs the above services on the strength of stevedore licence which is nothing but an authorization to enter the port premises and render services. If the service provider was not authorized by the Port to perform the above services, Port Trust would have raised objection or would not have allowed them to perform the services in the port premises other than simple stevedoring (loading & unloading) operation. Therefore, it should mean that the above services performed by the service provider are with the explicit approval of port authorities only.

13.As can be seen from the above reproduced findings of the adjudicating authority, which is more or less the same in all the orders, relies upon two propositions to classify the services rendered by the appellants under Port services viz. (i) that the services are rendered by the appellants within the port area of the new Mangalore Port or Karwar Port and (ii) Section 42(1) of the Major Port Trust Act, 1963 indicates that a Board shall have power to undertake the services, which they can licence to somebody else. At the outset, we may record that an identical issue arose as regards the assessee having a stevedoring licence and his operations were sought to be brought under the category of Port servicesby the revenue authorities in the case 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 Act, we find, that in terms of that Section, the major port is supposed to carry out a number of activities and there is provision in terms of the said section for the port to authorize any other person to render such services after taking prior approval of the Central Government. In the present case, the appellants strongly contend that the services rendered by them are not on behalf of the ports but on their own behalf. In other words, the appellants render directly the services and the licence is only a permission to undertake such services within the port premises. Therefore, it cannot be interpreted that the appellants are rendering any service on behalf of the port (emphasis supplied). We also find that the issue has been gone in depth in the cited decision of the Mumbai Tribunal wherein the Tribunal held that the port is supposed to give only facility for ship repairing and it is not expected of a port to directly render the services of ship repairing. Interpreting Section 42 and the provisions of the Service Tax in the Finance Act, the Mumbai Tribunal even held that the Boards circular issued on this behalf is not in accordance with law. Moreover, the appellants have produced a letter from the Mangalore Port Trust which clearly say that the appellants are rendering the services directly and not on behalf of the port (emphasis supplied). In these circumstances, there is much force in the appellants contention that services rendered by them would not amount to Port Services. In other words, it would only be Cargo Handling Services. But, the appellants would not come within the ambit of taxation, because in respect of Cargo Handling Services, the cargo in relation to exports are excluded from the purview. Since the appellant is only handling the export cargo, he would not be liable to Service Tax even under the category of Cargo Handling Services. In these circumstances, we do not find any merit in the order of the Commissioner and therefore, we set aside the same and allow the appeal of the appellants with consequential relief.

14.It can be seen from the above reproduced findings that the Bench had considered the provisions of Section 42 of the Major Port Trust Act and also the definition of the Port servicesunder Section 65 of the Finance Act, 1994 while allowing the appeal filed by assessee. Aggrieved by such an order, Revenue preferred an appeal to the Honble 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 servicereads as under :

Port Servicemeans 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 serviceas 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 serviceas reproduced hereinabove and Section 65(23) clearly puts a bar with regard to the imposition of tax meant for export which also includes handling of the export cargo.

Revenue is aggrieved by this order of the Honble High Court and has preferred an appeal before the Honble Supreme Court.

15.It can be seen from the above reproduced findings of the Tribunal as upheld by the Honble High Court, on the categorisation of the services rendered by the assessee in the case of Konkan Marine Agency as to the same will not fall under the category of Port services. It can be seen that all along, the assessee therein was functioning under stevedoring licence issued by the Port Trust. In the cases before us today, it is a common trait which revolves around the fact that the appellants herein were having the stevedoring licence and were functioning under the said licence and are to be considered as providing services as authorised by the port. We are of the considered view that after the judgment of the Honble High Court of Karnataka and the said judgment being not stayed by the Honble Supreme Court, will squarely applies to the cases in hand.

5.3 Here let us refer to the definition of port service given in Section 65(82) of Finance Act, 1994. The definition of port services before the amendment made by the Finance Act, 2010 (14 of 2010) dated 8.5.2010 (made effective from 1.7.2010) as given in the Section 65(82) was:

Port Servicemeans 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.

5.3.1After the said amendment made by the Finance Act, 2010 dated 8.5.2010 (made effective from 1.7.2010), the definition of port servicein Section 65(82) is:

Servicemeans any service rendered within a port or other port, in any manner.

5.3.2From above definitions of Port Service before the amendment of 1.7.2010 and after the said amendment of 1.7.2010, we find that prior to 1.7.2010 focus/emphasis was on any service rendered by a port or other port or any person authorised by said port or other part. But in the definition of Port Service after the amendment of 1.7.2010, the focus/emphasis is on any service rendered within a port or other port. Thus prior to the amendment of 1.7.2010 each and every service rendered within a port or other port cannot be covered by the category of Port Service unless it was specially rendered by such Port (a port or other port) or by a person authorised by such Port or other Port...... CESTAT, Bangalores decision in Aspinwall & Co. Ltd. (supra) supports our above stand. 5.3.3The 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 porthave been defined under Section 65(105)(zn) and (zzl), as follows:

Section 65(105) taxable servicemeans 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 service is being rendered wholly within a port or within other port. Its implication is that for the classification for these taxable services normal provisions of Section 65A are not applicable. In other words, all the services which are rendered within a port or within other port have to be categorised as port services only irrespective of provisions of Section 65A of Finance Act, 1994. However, these provisions and this position is effective only from 1.7.2010. And if such services have been rendered during the period prior to 1.7.2010, earlier provisions of law of Service Tax concerning port serviceswill only be applicable.

5.4 By reading above provisions in respect of definition of port services, as it was defined for the period prior to 1.7.2010 and for the period after 1.7.2010 and also after making a reading of corresponding taxable service(s) under Section 65(105)(zn) and (zzl), it is clear that various services which were rendered within the port area by the appellant in question, the said services cannot be called and categorised as port service for levying service tax when the definition of port service during the relevant period did not exactly cover such services which were rendered by them for transportation of goods, handling of cargo, etc., within Port area. In this regard, we again quote from CESTAT, Bangalores decision in case of Aspwinwall & Co. Ltd. (supra). CESTAT Bangalore in the said decision has also quoted the decision of Velji P. & Sons (Agencies) P. Ltd. (supra). We herein below accordingly reproduce paras 16.1, 16.2, 17 and 18 from the said decision of CESTAT, Bangalore.

16.1In the case of Velji P. & Sons, the facts were: the assessee therein was rendering the services of hiring of the barges, cranes, forklifts and they were licenced by Gujarat Pipavav Port Limited to carry out such activities. Revenue was of the view that the services rendered by the appellant would relate to goods hiring vessel and hence would fall under the category of port services as defined under Section 65(42) of the Finance Act, 1994. While allowing the appeal filed by the assessee against an order holding that the services rendered by the assessee would fall under Port services, the Tribunal held as under:-

6.After carefully considering the submissions made by both the sides, we find that the issue as to what service would get covered by the port 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 Port. Having already observed that such services were not required by the port, any authorization by the Port cannot convert the services into port services (emphasis supplied). In any case, we find that there is no authorization by the Port to the appellant to conduct the services on his behalf. Licenses issued by the Port authorities cannot be considered as authorization. Such licenses are issued by the Port authorities to all the persons working in the Port to ensure the safety and security of the Port Area and does not confer any power or authority of the Port on the person so issued with the licence. If the licences issued by the Port are taken as authorization, then such licences issued to Stevedores, ship chandlers, labourers, repairers of the vessels etc. would also become authorized persons by the Port to render services as Port services.

7.We further note that Section 42 of the Major Port Trusts Act provides for authorization by the Board for various services specified by that Port in the Official Gazette. For such authorization if effective, the same should have prior approval of the Central Government and the person so authorized cannot charge any excess payments than the amount specified in the tariff authority for Major Ports, by Notification in the Official Gazette. The licenses issued to the appellant are not governed by the statutory requirement of Section 42 inasmuch as the appellant is free to charge any amount from its customers for the services being provided by it and such collections are not regulated by the Port. In this view of the matter, the licence given to the appellant cannot be held to an authorization (emphasis supplied).

8.Licence means a permission given for specific purpose; the licence holder cannot be interpreted as having the powers or authority of the person issuing the licence, unless the licence specifically mentions about it. To take a simple analogy the person issued with driving licence, under no stretch of imagination, can be said to be functioning as Road Transport Authority. Authorization may be issued by way of licence, but not all licences are authorizations. Hence, the licences issued by Ports to various agencies (under Sec. 123 of MPTA) should not be confused with the authorization (may be by way of licence) issued under Section 42 of MPTA. The difference between authorization under Section 42 of MPTA and 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 container terminal or berths. This difference in functional freedom will bring out clearly the difference between an authorization given under Sec. 42 of MPTA and a licence given under regulations under Sec. 123 of MPTA.

9.In the light of the foregoing discussions and applying the ratio of law declared by the Tribunal in the case of Homa Engineering Works, we are of firm view that activities undertaken by the appellant does not fall under the category of Port Services.

16.2Revenue, aggrieved by such an order, preferred Civil Appeal Nos. 2429-2430 of 2008 along with an application for condonation of delay before the Honble Supreme Court. Their lordships on 24-3-2008 passed the following order.

Delay condoned.

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 M/s. 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

17.It can be seen from the above reproduced ratio of the judgment of the Tribunal in the case of Velji P. & Sons (Agencies) P. Ltd. that the facts, of that case and the facts in these cases before us are identical wherein various services were rendered by the appellants herein within the port area. Since the ratio of the judgment of the Velji P. & Sons is squarely applicable in this case, the judgment had also having been upheld by the Honble Apex Court, the ratio is binding on us. It is also to be noted that the judgment of the Honble Supreme Court in the case of Velji P.& Sons seems to have been accepted by the Government of India, which can be ascertained from the fact that the Government of India in Finance Act, 2010 expanded the scope of many existing services and one of them being Port services. The expansion of definition of Port services, which has been brought into play by the Finance Act, 2010, would seeks to include all services provided entirely within airport/port premises would fall under these services i.e. Port services and there is no pre-condition of any authorisation from the port authority for taxing the services. It is also seen from the Circulars issued by the Government of India, more specifically, Circular dated 26th February, 2010, the scope of modifications or expansion of definition 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 serviceswould 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, Ahmedabads decision in the case of Shreeji Shipping vs. CCE, Rajkot: 2014 (36) S.T.R. 569 (Tri.-Ahmd.). CESTAT, Ahmedabad in the said decision has held that the services rendered by anyone within the port would be taxed under the head of port services only w.e.f 1.7.2010, when there was amendment to the port services as discussed earlier. In other words, any service rendered by anyone unless it was by the Port itself or unless there was proper authorisation for port services only could not be taxed under the head of port services. Therefore the respective services in question rendered during the relevant period by the present appellant, M/s. HML Agencies (P) Ltd., Mangalore within the port area cannot be charged service tax under the category of port service. We take support again additionally from the CESTAT Bangalores decision in the case of S.S. Maritime: 2010 (7) S.T.R. 346 (Tri.-Ban.) and Honble Karnataka High Courts decision in the case of CCE, Mangalore vs. S. S. Maritime: 2011 (23) S.T.R. 114 (Kar.) wherein Revenues appeal was rejected subject to the liberty given to the Revenue to approach the Honble Apex court. CESTAT Bangalores decisions in the following cases also support our view in this issue:

* South India Corporation (Agencies) Ltd. vs. CCE, Visakahaptnam-I: 2010 (17) S.T.R. 170 (Tri.-Bang.);

* CCE, Visakhapatnam vs. Chowgule Brothers Pvt. Ltd.: 2010 (18) S.T.R. 164 (Tri.-Bang.); and

* Kin-Ship Services (India) Pvt. Ltd. vs. CCE, Cochin: 2008 (10) S.T.R. 331 (Tri.-Bang.)

5.7 We wish to refer again to Honble Delhi High Courts decision in the case of Airport Retail Pvt. Ltd. (supra) wherein it was held that the respective services rendered within airport premises could not be charged service tax as airport services because the amendment made by the Finance Act, 2010 is prospective and is effective after 1.7.2010 only. It is to be noted that services rendered within the Port area, which is subject matter of the present appeal and services rendered within airport premisesare comparable. Therefore, findings and the conclusion made by Honble Delhi High Court in the said case are relevant and applicable mutatis mutandis to the present facts and subject matter of this appeal. We, therefore, refer to the observations made in the said case by Honble Delhi High Court. In the respective paragraphs, the Honble Delhi High Court has observed as under:

39.In our view, the license arrangement between DIAL and the petitioner could 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 servicesunder 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 -

xxxxxxxxxxxxxxxx

(zzm)to any person, by airports authority or by any other person, in any airport or a civil enclave :

Provided that the provisions of Section 65A shall not apply to any service when the same is rendered wholly within the airport or civil enclave;

41.With the introduction of the proviso to Clause (zzm) of Section 65(105) of the Act, recourse to Section 65A was no longer available to determine whether any service rendered within the airport or civil enclave was more appropriately covered by any specific clause of Section 65(105) of the Act. Thus, after 1-7-2010, if any service which was otherwise taxable under the Act was rendered within the airport or civil enclave the same could be chargeable to service tax as airport services.

42.In view of the above discussion, even if the transaction between DIAL and the petitioner is considered as a simple letting out of immovable property, the same would not fall within the taxable service of airport services under clause (zzm) of Section 65(105) prior to 1-7-2010. Since it is stated that the petitioner closed its operations w.e.f. 30-6-2010, the transaction between DIAL and petitioner would in any event not be exigible to tax as airport services."

5.8 We also wish to refer to CESTAT, Delhis decision in the case of Airport Authority of India vs. CST, Delhi: 2015 (39) S.T.R. 35 (Tri.-Del.) as the observations made therein are relevant for the facts present in this appeal and give support to our views on the matter. In para 16.6 of said decision, CESTAT, Delhi observes as under:

16.6 ........................... During the period prior to 1-7-2010, when provision to Section 65(105)(zzm) making the provisions of Section 65A inapplicable to this clause was not there, the services specifically covered by other clauses of Section 65(105), even if provided by AAI or a person authorised by it in an airport/civil enclave, would be taxable as the service covered by the respective clauses, but w.e.f. 1-7-2010, even if a service, on the basis of Section 65A is covered by some other clause of Section 65(105), it would be treated as service covered by clause (zzm) of Section 65(105) if it has been provided in an airport/ civil enclave by AAI or by a person authorised by it.

6. Above discussions and analyses all the case laws quoted above make it abundantly conspicuous that in respect of the respective services rendered by the appellant, M/s. HML Agencies (P) Ltd., Mangalore during the relevant period, they cannot be made liable to pay service tax under the category of port services. Consequently the impugned order confirming the demand along with interest and imposing penalties under various provisions of Service Tax Law i.e., the Finance act, 1994 is hereby set aside and the appeal is allowed with consequential relief, if any, to the appellant.