No Suppression Of Fact By Adani Enterprise, Extended Period Of Service Tax Demand Not Invokable, says CESTAT

The appellant/assessee is in the business of providing various taxable services and has a centralised service tax registration. DGCEI gathered intelligence that the appellant has not paid the service tax on the lighterage charges collected from their clients at Belekari Port situated in the State of Karnataka, despite the fact that such lighterage services are appropriately covered under Port Services, which is a specified taxable service as per Section 65 (105) (zzl) of the Finance Act, 1994.

The investigation revealed that the appellant has entered into a 30-year lease agreement with the State of Karnataka for the use of port land for stacking iron ore, manganese ore, and other bulk cargoes at Belekeri Port for export and import.The nature of Belekeri port was officially recognised as a lighterage port, where barges are used for the carriage of cargo from the shore to the ship and vice versa.

The records resumed by the appellant revealed that the appellant has charged the amount from their clients for the provision of barging and lighterage services at Belekeri Port and has not shown the same in ST-3 returns during 2006-07 and 2007-08.

However, they showed the charges during the period 2008–09. They declared such charges as exempted income received while rendering port services. After October 2009, the appellant obtained the service tax registration under the category of "Transport of Goods by Way of Waterway Services", as provided under Section 65 (105) (zzzzl) of the Finance Act, 1994.

The appellant has been paying service tax on such lighterage charges by classifying the service as "Transport of Goods by Waterways Service," whereas during the period from April 2008 to September 2009 they declared it exempted income collected while rendering port services.

After the detailed investigation, a show cause notice was issued to the appellant for recovery of service tax. It was alleged that the barging activities, namely transportation of the exported cargo from shore to point of anchorage through barges, undertaken by the appellant at the Belikeri port, were in the nature of "port services'' and not covered under the category of "Transportation of Coastal Goods and Goods Transported through National Waterways and Inland Water Service".

On adjudication, the demand for service tax was confirmed under the category of port service.

Counsel on behalf of the appellant submitted that the new entry, viz. "Transport of Coastal Goods transported through National Waterways and Inland Waterways", was introduced by the Finance Act 2009, w.e.f. 06.07.2009, without changing another category of taxable service in relation to "Port Service". It is a settled position in law that when a new entry is brought under service tax levy, the same activity cannot be subjected to levy under an existing entry. The same activity cannot be subjected to levy under an existing entry unless the new entry is carved out of the existing entry.

The CESTAT has made reference to the CESTAT, Ahmedabad's decision in the case of Shreeji Shipping v. CCE, Rajkot, in which it was 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 an amendment to the "port services".

"The appellant has no mala fide intentions and suppressed any facts with the intention of evading payment of service tax." It is also on record that the appellant has represented the matter before the audit team and also before the department during the investigation of the case. This clearly shows that there was no suppression or willful misstatement on the part of the appellant. The appellant in the present matter also provided all the details, documents, and records related to the disputed activity before the department. In these circumstances, charges of suppression or wilful misstatement do not survive against the appellant. Thus, the extended period of limitation is also not invokable in the present matter and no penalty is payable, "the CESTAT said.

Case Title: Adani Enterprise Limited Versus C.S.T-Service Tax-Ahmedabad

Citation: Service Tax Appeal No. 97 of 2012-DB

Counsel For Appellant: Senior Advocate V.S. Nankani

Counsel For Respondent: Additional Commissioner T.G. Rathod

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