1. One of these applications is for waiver of predeposit and stay of recovery in respect of service tax amount of over Rs. 1.3 crores for the period July, 2003 to December, 2006 as also in respect of penalties imposed on the appellants. The remaining application is for similar relief in respect of service tax amount of Rs. 2.7 crores for the period July, 2003 to January, 2007 and associated penalties. In both the cases, the challenge is against demand of service tax raised on the assessee in the category of "Port Services" defined under Section 65(82) of the Finance Act, 1994. In one case, the appellants were engaged by M/s. Chennai Petroleum Corporation Ltd. (CPCL, for short) to undertake a variety of activities in relation to import and clearance of crude oil and natural gas, raw materials for M/s. CPCL, through a private jetty owned by M/s. CPCL coming within the limits of Nagapatinam Port and subject to the control of Tamil Nadu Maritime Board (TNMB, for short). In the second case, the appellants were engaged in similar activities in relation to import and clearance of liquid naphtha imported by M/s. PPN Power Engineering Co, Ltd. (PPN, for short), through Thirukkadaiyur Port, which is also a port controlled by TNMB. M/s. CPCL and M/s. PPN were authorised by TNMB to undertake such activities in the respective port areas. These companies engaged the appellants to undertake such activities. In respect of these activities, the Commissioner has demanded service tax in the category "Port Services" from the appellants.
2. After examining the records and hearing both sides, we note that, as per the definition given under Section 65(82), "Port Services" are those which are rendered by a port or a person authorised by a port.
These services may be rendered in any manner in relation to goods or marine vessels. The case of the appellants, principally, is that they were not authorised by TNMB to undertake any of the aforesaid activities in the respective port areas and, therefore, they cannot be asked to pay service tax in the above category. It is also submitted that M/s. CPCL and M/s. PPN were the persons authorised by TNMB to perform port services as defined under Section 65(82). It is also submitted that, from 01.05.2006, the date on which "support services for business or commerce" were introduced for levy of service tax under the Finance Act, 1994, the appellants have been paying service tax in this category in respect of the services in question. For the period May-December, 2006, they accordingly paid over Rs. 22.5 lakhs. This period is comprised in the period of dispute in this case. (They paid similar tax for subsequent period also, which, however, is not relevant to this case). Learned Counsel for the appellants has also claimed support from the decision of this Tribunal in Velji P. & Sons (Agencies) Pvt. Ltd. and Anr. v. Commissioner of Central Excise, Bhavnagar [2007] 9 VST 372 (CESTAT Ahd), wherein services rendered by a CHA were held to be not falling within the purview of 'port services' on the ground that the CHA was not authorised to do such services by the port authority.
3. We have heard learned Special Consultant for the Revenue, who has reiterated the findings of the Commissioner and has also made an endeavour to establish that the appellants, in the facts and circumstances of the case, should be deemed to have been authorised by the port authority to render port services as defined under Section 65(82). In this connection, it is submitted that the CEO of TNMB had opined that the appellants were deemed to have been authorised to render port services. It is submitted that this opinion was not rebutted by the appellants and, therefore, the finding of the Commissioner on the point should be taken to have been accepted by the appellants.
4. We have considered the submissions. After a perusal of the relevant provisions including Section 32 of the Tamil Nadu Maritime Boards Act, we find that any authorisation by Port Authority for purpose of Section 65(82) of the Finance Act, 1994 should be express authorisation under the Finance Act, 1994. Moreover, the relevant findings of the Commissioner also do not seem to be advancing the case sought to be made out by learned special consultant. Learned Commissioner appears to have rejected the opinion given by the CEO, TNMB. Having done so, learned Commissioner cannot be heard to say that the appellants should be deemed to have been authorised to perform port services in terms of Section 65(82) of the Finance Act, 1994. In the absence of express permission, we have found a valid point in the submissions made by learned Counsel. Accordingly, it is prima facie held that the appellants have a good case against the impugned demand. Moreover, they are also supported by a decision of this Tribunal. It has also been noted that the appellants have paid an amount of over Rs. 22.5 lakhs as service tax in a different category (support services for business or commerce), for which they have got themselves registered with effect from 01.05.2006, the date on which the said category of service was incorporated in the Finance Act, 1994. The Revenue appears to have gladly accepted the above payment of tax. If that be so, we are at a loss to understand as to why the Revenue seeks to demand service tax from the assessee for the same period in a different category (port services).
5. Having found a prima facie case for the appellants, we grant waiver of predeposit and stay of recovery in respect of the amounts of service tax and penalties.