:: dIP (fli)T Iq11'q, t T tik c'i j::

0/0 THE PRINCIPAL COMMISSIONER (APPEALS), GST& CENTRAL EXCISE,

IcIu1 lT / 2 Floor, GST Bhavan,

kr R / Raàe Course Ring Road,

loie)d/Rajkot-360 001 Tele Fax No. 0281 — 2477952/244 1 142Email: cexappealsrajkotgmail.cOm

l'fll /9114I/ Appeal/File No.

V2177 IRAJ/2015

0.1.0. No.

01/ADCIPV/2015-16

Date 20.04.2015

rtftr iTf 1 4 r(Order-In-Appeal No.): '..

RAJEXCUS-OOO-APP-O06-2O19

1T1T / 24.01.2019 '' ./ 28.01.2019

Date of Order: Date of issue.

flR *jclq; RI

Passed by Shn Kumar Santosh, Principal Commissioner (Appeals),Rajkot

• T/ 9/ t'o'./ il • 5T cMl '4t1./

riIlci iil s1Tr*3jrm/ Arising out of above mentioned 010 issuedbyAdditional/Joint/DeputY/ASSiStaflt Commissioner, Central Excise/ST / GST,

Rajkot / Jamnagar / Gandhidham W fl'is.iI & 'ifil *'T1T /Name&Address of the Appellants & Respondent :-,

MIS Gujarat Maritime Board,Sikka, Saru Section Road, Jamnagar,

W t[) ' /AiIe.uI Any person aggrieved by this Order-in-A$hl may file anappeal to the appropriate authority in the followmg way. .

-ifia.ui (A)86

'.t 1f41 .1944 ilTU 35B atr4r

Appeal to Custonas,.Excise & Service Tax Appellate Tribunal under Section 35B of CEA, 1944 / Under Section 8O of the Finance Act, 1994 an appeal lies 10:-

ci4Tsvi ciict.' .eRe i fln t 3Pfffttr 4I [Mul*( f*IIT tf(3, T 2,

The speciI bench of Customs, Excise & Service Tax Ap,pellate Tribunal of West Block No. 2, R.K. Puram, New Delhi in all matters relatthg to classification and valuahon.

1) Tt[ 3T11ft iiqj (ma)T4 -niir, iifl iii- I!

To the West regional bench of Customs', Excise & Service Tax Appellate Tribunal (CESTAT) at, 2M Floor Bhaumah Bhawan, Asarwa Ahmedabad-380016in case of appeals other than as mentionea in para- 1(aj above • . •. .

EA-3 'r TT 'Aldl 'iT I 1 r rr'r ;rT - fT, e.(& 5 TT eiig e 50 ii 31'JT 50 c1I Ial WrT: 1,OQ/-

5,000J- 4 iThT 10,000/- 1TflTnU tt. lalfjjr rnw, e1ct u'ri iia dit rrr imit iiO &iI.o etq'ij I r

IclII, 'tT T11N TTTT fd .t50O/-rl.s1ftci ri'irTrr t/

The appeal to the Appellate Tribunal shall be filed in quadruplicate in fdrii EA-3 / as prescribed under Rule 6 of Central Excise [Appeal) Rules 2001 and shall be acconpamed against one which at least should be accompanied, by a • fee of' • s. 1 000/- Rs.500DL- R.10,0O0j- where a1aount of dutydemand/interest/'penalty/refund is upto lac., 5 Lan to 50 tac and above 50 Lap respectively in the form of crossed bank draft in favour of Asst. Registrar of branch of any nomntated public sector balik of the place •where the bench of any nominated public sector btnk qf the place where the bench of the Tribunal is situated. Application made for grant of stay shall be accompamed by a fee of Rs. 500/-.

4lefi TflTftceT 5T_di.fl'i, 11 i,l994 tti(I 86(1) i 3f1T_T ikiift, l99 f4i 9(1) cici r0g ( ilui t 9t t1'TiT ii mTaTtin UT 'ii 5

iI T ii ',5' T 50 wa 3TJ SQ iia ' duals. rJ: 1,000/- 5,QOO/- P.TT 1Q,000/- tr 1tii1t iTT k111tj r i,ttt uk tIe.&I T rusI

T1111i'is. ti1 ,su1 'iq aitr1ii lIi kl.ir T)t['si TTFdu41clk 'teulals.ui I

1;ls.o iuts..ii Iiii I,

The appeal under sub section LiLof Seètion 86 of t,he Finance Act, 1994, to the Appellate Tribunal Shall be filed m quadruplicate in Form S.T.5 as prescnbed ¶lnder\Rulef9(1) of the Service Tax Rules, 1994, and Shall be accompanied by a copy of the order appealed against (one Mwtuch shall be certified copy) and should,be accompanied by a fees ot ,Rs. 1000/- where the aiottitof rvice tax & interest demanded & penalty l•evied of Rs. '5 Lakhs or less, Rs5000/- whre the amotint bferiice tax & interest demanded & penalty levied is more-than five iak.hs but riot excee. 'g,Rs. Fifty Laicha, s.10,000/- where the aniount of service tax & interest demanded & penalty levied '. more than fifty Lhs rupees, in the form of crossed bank draft in favour of the Assistant Ristrar of . bench of n'ominatec Pdb1c Sector Bank of-the place where the bench of Tribunal is situated. / Kpplicatio 'a .. e for.gr4t of stay shall bçccompamed by a te of Rs.500/ -.

(i)

(ii)

(B)

(1) fu tTt 1994 1TU 86 3' x A)4 31'ftT fiiic.fl 1994 f~i 9(2) r 7* uIi 3rT r*Ici.i

tZrscnv i9V t .-ifl i4l I / The appeal under sub section (2) -

. ).. i&secion : e Finance Act 1994, shailbe ified in For ST.7 as prescribed under Rule 9 (2J &9(2A) .1 Service Tax Rules, 94 and shall be accompanied by a copy of order of Commissioner Cntra1 kxcise or ,Conmissoner, Central cisc (Appeals) (one pf which shall be a certifed copy) and copy of the order passedby the Comniissionerau • orizing the Assistant. Commissioner or Deputy Commissioner of Central Excise/ Ser çe/Pa% tci1e th appeal before the Appellate Tribunal.

() flu[1944TU 35t 3t,

w n1cui 3TtftT c rtTrr

,1rr, rf1

, r jTT1 fi I I , 1TU t ti • : 1T (i) rru ii (ii) . '

(iii) 9iTiT.. -6 . 14f - W TU ' -'r

.' (f° ) ' ' 2014 1f1 1c.fl rfift it iJL '.. For an appeal to be flied befo - A Sec of the Central Excise Act, 1944 which is also made.applicable to Service Tax .tio' •:f eFThCe t, 1994, an appeal against this order shall lie before the Tribunal on payment o Pe e duty or duty and penalty are in dispute, or penalty, where penalty alone is in i; d ltfIof pre-deposit payable would be subject to a ceiling of Rs. 10 Crores, .

Under Central Excis- - .. 'iCe "inde? shall include: ainountdet; ei'C•\ 4 Sec :

ii) amount of -- .. -$7át

— iii) amount pay. .'-- . 'ule 6f'the (nat retht Rules - provided further that the provisfon o this Sétion shall not apply to the stay application and appeals

- pending before any appellate authority prior to tile cormencement of the Finance (No.2) Act, 2014;

c-i: (C) Revisionapp cati n to_Govrnment gf dia: Tt I IiIci 1II 14i,1994 ' !TT 3SEE .i-' 4iii 1T9' TfITUF iii*r rt,f i- iii, iuii, '4f 'flci.i I' ic 'r?, '' ftft-11000l, it fi I 'ii'ii11't / .

. . . A revision application lies to the Under Secretary, to the Government of India, Revision Application Unit, Ministry of Vinance Department of Revenue, 4th Floor, Jeevan Deep Building, Parliament Street, New Delhi- ll000 under Section 35EE of the CEA 1944 iii respect of the following case, governed by first proviso to sub- seclion-(l) of Section-35B ibid: •.- . - ft'r1fl I it) -

(i) i-r4) t*-qui rur, i't*fl ii.i irrf4)

ere the loss octurs in transit- from a factory to a warehouse or to anoti er factory or from one warehouse to another during the coujse of processing of the goods in a warehouse or in storage whether in a factory or in a warehouse

(ii) ,

territory outside India of on excisable

/ In case ofgoods exported outsideindia export to Nepal or Bhutan, without payment of duty.

eit of any duty allowed to be ulili7Pd towards payment of excise duty on flxa1 products under the provisions of this Act or the Rules made there under such orcie Is passed by the Commissioner (Appeals) on or after the date appointed under Sec. 109 of the Finance (No.2) Act, 1998.

iic i1 1944k a'Rr 35-EE d1ci'ifl ii TR-6 iu sii-fl Thl:iove application shall be made in duplicate in Form No. EA-8 as specified under Rule, 9 of Central Excse (Appeals) Rures, 2001 within 3 months from the date on winch the order sought to be appealed against is communicated and shall be accompanied by two, copies each of the 010 and Order-In-Appeal. It should also be accompanied by a copy of TR-6 Chaflan evidencing payment of prescribed fee as prescribed under Section 35-EE of CEA, 1944, under Maior Head of Account

(vi) tiWTT Ie ¶isffe tactfl tii"fl 'ifti "1i iiJ e-I 1 1I -i T I" 200/- IT 'TTTT144I 'iIt 3''ft 1-14 chH "II ''4I s4Icrtt '4 100O-/Wm'14I1I'-) The revision apnhcation shall be accompanied, by a fee, of Rs. 200/- where the amount involved in Rupees One Lac or less andRs. 1000/- where the amount involved is more than Rupees One Lac.

(D) if't t1ti t ' f 1II11II f1TT lvi 1 t 3PI1't T T' T i1T TT 1Ic1I I / case,if the order covers v,arious xumbers of order- in Original, fee for each 0.1.0. shoild be paid in the aforesaid manner, not withstanding the fact that, the one appeaL to the Appe1ant Tribunal or the one application to the Central Govt. As the case may be, is filled to avoid scriptona work if excising Rs. 1 lakh fee of Ks. 100/- for each.

(E) -4I 4 I11 iIlIl-i, 1975, l-i 3TR 41 si1tlZ l 4 I1 IThII 1%ñft 6.50 WT '- 4I-iI4 spit 1-i I 'rli / - - -

- One copy of application or 0.1.0. as the case nay be, and, the order of the adjudicating authority shall bear a court fee stamp of Rs.6.50 as prescribed under Schedule-I in terms of the Court Fee Act'1975, as amended.

(F) 4ii _9t, 1I j9t t )cfli 1T1t1 (T' f1) f 4lI), 1982 ' 1r t *iPaci rp~ '

'11 I'M_QI ci 'a fi1'iT4t itt , 1' tfl' I 'IIc1 9P4 I 1Icl I i / • -

Attention, is also invited to the rules coverirg these and other related matters contained in the Customs, Excise and Service Appellate Tribunal (Procedure) Rules, 1982. - ' -

(G) 3' flc'lIq TFI9'T t 'l' rfti' i'i, i' 1'ccI 3fr 'i''11c141 iii.') 11I4T filIfl4 ieiis

www.cbec.gov.int11'Pci IJ - . -

For the elaborate detailed and latest provisions relating to filing of appeal to the higher appellate authority, the appellant may rder to the Departmental website www.ctec.gov.in

Appeal No V2/771RAJ12015

3

:: ORDER IN APPEAL::

The present appeal has been filed by Gujarat Maritime Board, Sikka,

Saru Section Road, Jamnagar (hereinafter referred to as "the appellant")

against Order-In-Original No. 01/ADC/PV/2015-16 dated 20.04.2015

(hereinafter referred to as "the impugned order"), issued by the Additional

Commissioner, Central Excise & Service Tax, Rajkot (hereinafter referred

to as "the adjudicating authority").

2. The brief facts of the case are that the appellant received

Rs.1,50,00,000I-( Rs.75,000I- each as Scrutiny Fee and Supervision fee)

from M/s. Bhàrat Oman Refineries Limited (hereinafter referred to as

"BORL") and also received Rs.2,25,00,000/- from M/s. Reliance Port and

Terminals Limited (hereinafter referred to as "RPTL") towards scrutiny fee

and supervisions charges for construction of Single Point of Mooring

system (hereinafter referred to as "SPM') during the FY 2007-08 to 2010-

11; that the appellant has provided the services under the taxable category

of "Port services" classifiable under Section 65 (82) of the Finance Act,

1994 (hereinafter referred to as the "Act"), however, no service tax was paid

by the appellant on the above amounts. Show Cause Notice No. V.ST/AR-

JMR/JC/45/2013 dated 25.3.2013 was issued to the appellant demanding

Service Tax of Rs.33,99,00Q/- under proviso to Section 73(1) of the Act

along with interest under Section 75 of the Act and proposing penalty under

Section 76, Section 77 and Section 78 of the Act. The show cause notice

was adjudicated vide Order-in-Original No. 104/ADC/MG/2014 dated

20.2.2014 (hereinafter referred to as "the first adjudicating authority")

wherein demand was confirmed holding that the services provided are "port

services", however, no document was available to ascertain whether the

appellant had earned the income as statutory levies in the capacity of a

legislative body and no proof like schedule of rates published by GMB duly

approved by the Government of Gujarat for the purpose was available. The

appellant preferred appeal against that order dated 20.2.2014 and the

appeal was decided by the then Commissioner (Appeals), Rajkot vide

Order-in-Appeal No. RJT-EXCUS-000-APP21 5-14-15 dated 9.1 0.2014 and

the matter was remanded back to the adjudicating authority hoIdng that the

Page No. 3 of 14

Appeal No V2/77/RAJ12015 4

appellant has charged these fees in lieu of sovereign function discharged

by them and the same is not taxable under the category of the, port

services, however, the facts need to be confirmed on submission of

Schedule of Port charges vis-à-vis'agreements made by the appellant with

their licensees. In the denovo proceedings, the lower adjudicating authority

vide the impugned order confirmed demand of service tax of Rs.

33,99,000/- again along with interest and again imposed penalty under

Section 76, Section 77 and Section 78 of the Act.

3. Being aggrieved with the impugned order, the appellant filed the

present appeal on following grounds: -

(i) The impugned order was exceeding the mandate of the remand

under the Order-in-Appeal dated 9.10.2014.

(ii) The impugned order is non-speaking inasmuch as it did not deal with

most of the submissions made by the Appellant despite specifically noting

the same in the impugned order.

(iii) The appellant is a statutory authority constituted under the provisions

of Gujarat Maritime Board Act, 1981 and derives its power to administer the

minor ports within the state of Gujarat vide Entry 31 in the List II of the

Seventh Schedule to the Constitution of India; that with effect from April,

2008 the Wharfage charges, port charges etc are to be directly deposited to

the credit of the State Government of Gujarat in its consolidated fund and

the appellant does not receive any money out of those charges paid by the

customers; that the purported consideration for the alleged services have

been directly credited to the consolidated funds of the state of Gujarât by

virtue of Section 22A of the Gujarat Maritime Board, Act, 1981 arid Central

Government has no power to tax the income of the state government.

(iv) That the appellant has discharged sovereign functions of the State by

giving right to construct SPM to M/s. RPTL and M/s. BORL and any

charges collected in pursuance thereof amount to charges collected in

discharge of sovereign function and these functions do not amount to

rendering of any services. They relied upon judgement of the Hon'ble

Page No. 4 of 14

Appeal No V2177/RAJ/2015

5

Supreme Court, in their own case reported at 2007(14) SCC 704. They

further Relied upon 5 member bench of Hon'ble Supreme Court in the case

reported at AIR 1965 SC 1107 and CBEC Circular No. 89/7/2006-ST dated

18.12.2006,point No. 999.01/23.08.2007 of master circular dated

23.08.2007, FAQ 2008/04.12.2008 and FAQ 201 0/01 .09.2010 both issued

by DGST; decisions per 2007 (7)STR 702 (Tn-Bang) (M/s. CMC Ltd), 2008

(9)STR 494 (Tn-Bang) (M/s. Electrical Inspectorate, GOK), 2008 (10) STR

367 (Tn-Bang) (M/s. CS Software Enterprise Ltd, 2014-TIOL-2022

CESTAT-Mum (M/s. MIDC)

(v) The activity of the appellant can not be taxed under the taxable

category of port services and for this they relied upon the Final Orders of

CESTAT reported as 2011-TIOL-1848-CESTAT-Bang, 2014-TlOL-2548-

CESTAT-Mum.

(vi) Reliance of the words "directly or indirectly" in the definition of "Port

Services" with regard to provision of services in relation to Vessel and

Goods by the adjudicating authority is wrong in view of the CESTAT's

larger bench decision in the case of Larsen & Toubro Ltd (2006-TIOL-814-

CESTAT-Del — LB).

(vii) The activity cannot be classified as port services as the port has

come into existence after the alleged services were rendered by the

appellant; the same can be classified as consulting engineer services and

not port services.

(viii) Entire demand was time barred as the facts were known to the

department; the computation of liability is also incorrect as amount received

is to be considered as inclusive of service tax.

(ix) Penalty is not imposable under Section 76, Section 77 and Section 78

of the Act; that the issue involves bona fide interpretation of law and

Section 80 will be applicable in the present case.

4. Personal hearing in the matter was attended by Shri H.P. Singh,

Chartered Accountant on behalf of the appellant, who reiterated the Page No. 5 of 14

6Appeal No V2177/RAJ/201.5

department has conducted audit of 2006-07 to 2009-10 during July, 2010

and hence, SCN dated 25.3.2013 issued by the Joint Commissioner,

Central Excise & Service Tax, Rajkot is definitely time barred; that DGCEI

had also conducted investigation against the appellant during 2009-10 for

the period of 2004-05 to 2008-09 and also issued SCN to Alang port but not

to them/Bedi port as Port office Bedi included sub-port Sikka; that this is 2T

round of litigation before Commissioner (Appeals) on this issue; that in

earlier round Commissioner (Appeals), Rajkot vide Order-in-Appeal dated

13.10.2014 remanded the matter for verification of relevant documents like

schedule rate published by Gujarat Maritime Board duly approved by the

Government of Gujarat; that the details were submitted to the lower

adjudicating authority on 31.10.2014; that the impugned order dated

20.4.2015 decided vide Para 38 is in contraventionof decision already

taken vide Para 6 to Para 10 of OIA dated 13.10.2014, which had

remanded the case for verification; that appeal against this OIA dated

13.10.2014 was dismissed by CESTAT but their arguments were restored

(to be agitated) by the Hon'ble High Court; that the charges paid by RPTL

and BORL as per written agreements duly ratified/approved by the

Government of Gujarat again submitted during personal hearing; that these

written agreements very clearly state that the appellant was specific

authority of the Government of Gujarat; that on the basis of these

documents clearly establishing that the appellant perform sovereign

function of the Government of Gujarat and hence, appeal may be allowed.

FINDINGS: .

5. I have carefully gone through the facts of the case, impugned order,

the details of the earlier proceedings and submissions made by the

appellant in the Appeal Memorandum and at the time of personal hearing.

The issue to be decided is whether the consideration received by the

appellant is towards provisions of "port services" or not and whether the

appellant is performing sovereign functions of the State or otherwise.

6. The facts reveal that the proposal of demand of service tax of Rs.

33,99,000/- along with interest made under the impugned SCN dated

25.3.2013 was confirmed by the first adjudicating authority vide Order-in-

Page No. 6of14

Appeal No V2/77/RAJ/2015

7

Original No. 104/ADC/MG/2014 dated 20.02.2014, which was challenged

by the appellant before the then Commissioner (Appeals), Rajkot, who vide

Order-in-Appeal No. dated RJT-EXCUS-000-APP-21 5-14-15 dated

09.10.2014 held that the appellant has charged these fees in lieu of

sovereign functions discharged by them and the same is not taxable under

the category of the port services, however, he remanded the matter back to

the lower adjudicating authority to examine the schedule of port charges

vis-à-vis agreements made by the appellant with their licensees to be

produced by the appellant. The relevant paras of OIA dated 9.10.2014 are

reproduced as under:

"6. I have carefully gone through the facts of the case, impugned order,

appeal memorandum and stay petition and pleas made by the appellant at

the time of personal hearing.

The limited issue to be decided in the present appeal is whether the

impugned order of the lower authority demanding seivice tax from the

appellant under the categoty of "Port Service", being a state government

department, is proper and legal, or not.

7. Before deciding the issue, / reiterate the statutory provisions involved

in the instant case/appeal.

8. As per the provisions of Section 65(82) of the Finance Act, 1994,

prior to 1.7.2010 the definition of 'Port Service' reads as follows:

'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.'

9. / find that the appellant has contended that they have charged fee as

per the constitutional powers conferred on it and the same cannot be

equated with the consideration for the services rendered. The appellant has

further contended that entire payment of scrutiny fee and supervision fee

has been received by them prior to 30.6.2010. I also observe that the

appellant have charqed the fees in lieu of sovereiqn function discharged by

them and the same is not taxable under the cateqorj of port service, in view

of CBEC Circular No. 89/07/2006 dated 18.12.2006 which reads as under: -

the activities performed by the sovereign/public authorities

under the provision of law are in the nature of statutory

obligations which are to be fulfilled in accordance with law. The

Page No. 7 of 14

Appeal No V2i77fftJ/2O15 8

fee collected by them for performing such activities is in the

nature of compulsory levy as per the provisions of the relevant

statute, and it is deposited into the Government Treasury. Such

activity is purely in public interest and it is undertaken as

mandatory and statutory function. These are not in the nature of

service to any particu!ar individual for any consideration.

The refore, such an activity performed by a sovereign/public

authority under the provisions of law does not constitute

provision of taxable service to a person and, therefore, no

service tax is 1ev/able on such activities."

10. It is apparent from the above that the activity which is done in the

public interest and which is undertaken as mandatory and statutory function,

and not in the nature of service to any particular individual for any

consideration, cannot be treated as taxable service. Accordingly, I am of the

view that the service tax demand made vide impuqned order is on the wrong

footing and liable to set aside...

11. However, I also find that before adjudication of the demand, the lower

authority has asked the appellant to submit any proof like schedule of rates

published by GMB duly approved by the Government of Gujarat, and

contended that in the absence of production of any supporting document to

prove their case, the argument of the appellant cannot be accepted. The

lower authority confirmed the impugned order mainly on this ground. This is

a vital part of the case which cannot be overlooked. Therefore, I hold the

view that the matter needs reconsideration after examining the Schedule of

Port charges vis-ä-vis agreements made by the appellant with their

Licensees viz. MIs. Reliance Port and Terminals Ltd. and MIs. Bharat Oman

Refinery Ltd. in the backdrop of the definition of 'Port Service' envisaged

under the provisions of Section 65(82) of the said Act.

(Emphasis supplied)

6.1 In view of above, I find that the then Commissioner (Appeals), Rajkot

vide aforesaid OIA dated 09.10.2014 had already held that the appellant

had charged these fees in lieu of sovereign functions discharged by them

and the same was not taxable under the category of the port services and

the department did not go in appeal against that order. However, the lower

adjudicating authority in denovo adjudication did not consider the

submissions of the documents and contentions of the appellant and again

Page No.8 of 14

Appeal No V2177/RAJ/2015

confirmed the demand of servibe tax without holding as to how documents

did not support the appellant's cOntentions.

7. The appellant in the present appeal has again contended that the

appellant is statutory authority constituted under the provisions of Gujarat

Maritime Board Act, 1981 and derives power of State to administer the

minor ports within the state of Gujarat vide Entry 31 in the List II of the

Seventh Schedule to the Constitution of India; that with effect from April,

2008 the Wharfage charges, port charges etc. are to be directly deposited

to the credit of the State Government of Gujarat in the consolidated fund of

the State of Gujarat and the appellant does not receive any money out of

•that amount; that the entire fees had been directly credited to the

consolidated fund of the State of Gujarat by virtue of Section 22A of the

Gujarat Maritime Board, Act, 1981. I find that the Government of Gujarat

enacted Gujarat Maritime Board Act, 1981 and powers of administration,

control and management of minor ports and for matters connected

therewith have been conferred to Gujarat Maritime Board. The appellant

has derived power to levy charges/fees for port facilities under Section 37

and Section 38 of the Chapter VI of the Gujarat Maritime Board Act, 1981,

which are reproduced as under:

"Section 37. (1) The Board shall from time to time frame a scale of rates

at which and a statement of the conditions under which any of the sei'vices

specified hereunder shall be performed by itself or any person authorised,

under section 32 at or in relatIon to the port or port approaches -

(a) transhipping of passengers or goods between vessels in the

port or port approaches;

(b) stevedoring, landing and shipping of passengers or goods from

or to such' vessels, to or from any wharf, quay, jetty, pier, dock, berth,

mooring stage, or erection, land or building in the possession or

occupation of the Board or at any place within the limits of the port or port

approaches;

(C) cranage or porterage of goods on any such place;

(d) wharfage, storage or demurrage of goods on any such place;

(e) any other seniice in respect of vessels, passengers or goods

excepting the services in respect of vessels for which fees are chargeable

under the Indian Ports Act.

Page No. 9 of 14

Appea' No V2/77/RAJ/2015 10

(2) Different scales of rates and conditions may be framed for different

classes of goods and vessels ano for different ports."

"Section 38. (1) The Board shall, from time to time also frame a scale

of rates on payment of which and a statement of conditions under which

any property belonging to, O:' the pOssession or occupation of, the Board

or any place within the limits of the port or port approaches may be used

for the purposes specified hereunder: -

(a) approaching or lying at or alongside any buoy, mooring, wharf,

quay, pier, dock, land, building or p!ace as aforesaid by vessels;

(b) entering upon or playing for hire at or on any wharf, quay, pier,

dock, land, building, road, bridge, approach or place as aforesaid by

animals or vehicles canying passengers or goods;

(C) leasing of land or sheds by owners of goods imported or

intended for export or by steamer agents;

(d) any other use of any land, bulldinq, works, vessels or

appliances belonging to or provided by the Board.

(2) Different scales of rates arid conditions may be framed for different

classes of qoods and vessels and for different ports."

(Emphasis supplied)

7.1. From the above statutory provisions, it is amply clear that the

appellant is empowered to charge scrutiny fee and supervision fee from

RPTL and BORL for granting approval of installation of SPMs and

supervision of SPMs on behalf of the Government of Gujarat and the act of

charging fees from the licensee as per written agreements is nothing but a

sovereign function. Therefore, I am of the view that the said fees levied by

them do not attract service tax as clarified vide CBEC Circular No.

89/7/2006-ST dated 18.12.2006, point No. 999.01/23.08.2007 of master

circular dated 23.08.2007, FAQ 2008/04.12.2008 and FAQ

2010/01.09.2010 issued by DGST, CBEC.

7.2. I also find that the Hon'ble CESTAT, Ahmedabad in appellant's own

case reported as 2015 (38) STR 776 (Tn. — Ahmd.) has held that any

amount collected, after 01.04.2008, by Gujarat Maritime Board, has to be

considered as statutory levy only and Service Tax liability thereon may not

arise, if collected as per Section 22A of the Gujarat Maritime Act, 1981.

Relevant paras of the final order are reproduced as under:

Page No. 10 of 14

Appeal No V2/77/RAJ/2015

"4.4.1 Article 246 of the Constitution of India prescribes subject matter of

laws made by Parliament and' by the legislatures of States. Article 246(2)

states as under:

"(2) Notwithstanding anything in clause (3), Parliament and, subject to

clause (1), the Legislature of any State also, have power to make laws with

respect to any of the matters enumerated in List Ill in the Seventh Schedule

(in this Constitution referredto as "Concurrent List")."

4.4.2 Accordingly, vide Entry No. 31 of List Ill of the Seventh Schedule the

State Government is empowered to make laws for ports other than those

declared by or under law made by Parliament or existing law to major ports.

4.4.3 The State Government of Gujarat has enacted Gujarat Maritime

Board Act, 1981' in view of the power given to it by Entry No. 31 of List lii of

the Seventh Schedule to the Constitution of India. The appellants are a body

constituted under the provisions of Gujarat Maritime Board Act, 1981 to

administer minor ports within the State. The shipping and landing fees are

collected by the appellants under the provisions of Gujarat Maritime Board

Act, 1981.

4.4.4 Hon'ble Supreme Court in the case of appellants itself, reported at

2007 (14) SCC 704, the Hon'ble Supreme Court observed as under.•

"7. As can be seen from the preamble of the 1981 Act, it is clear

that the Board has been constituted, inter alia, for purposes of

development and maintenance of minor ports. Under the said Act, the

Maritime Board also renders services like stevedoring, transport of

goods, storage, shipping etc. It is also in charge of upkeepment of

jetties, wharfs, roads, lights etc. However, the main object of the said

Act is development of minor ports in the State of Gujarat. The

income, accruing to the Maritime Board, including reserves and

surplus are also required to be deployed and credited to a separate

fund to be utilized for development of minor ports within the State. In

thIs connection, we quote Sections 73, 74 and 75 of the 1981 Act

herein below which read as under ,,

10. It is also to be mentioned that w.e.f. 1-4-2008, the Govt. of Gujarat has

amended the Gujarat Maritime Board Act, 1981, wherein Section 22A has

been inserted. The said Section 22A specifically states that any amount

provided by Gujarat Maritime Board, the appellant herein, is a State levy and

Page No, 11 of 14

Appeai No V2177/RAJ/2015 12

a statutory levy and proceeds of stch iev' a' credited to the Consolidated

Treasury Fund of State of Gujar. f that ba soany amount collected after

1-4-2008 by Gujarat Ma fit/me 3'ard. can be considered as statutory levy

only and Service Tax liability theron may r;i arise."

(Emphasis supplied)

7.3 The appeal filed by the dearient aganst the aforesaid decision has

been dismissed by the Hon'hle Suoreme Court reported as 2015 (39) STR

529 (SC) and hence the Finai Order of the Hon'ble CESTAT, Ahmedabad

has attained finality in 2015.

7.4. I would like to reproduce th€ relevant Section 22A of the said Act

also, inserted w.e.f. 1.4.2008, which reads as under:

"22A. (1) The State Government shall levy,

(,) Charges for landing and shippinq, licence fees, waterfront and

lLqhterage charges at minor ports which are under administration, control

and management of the Board; and

(iO Waterfront royalty as applicable at minor ports in the State of

Gujarat, at such rates as the State Government may, by notifiqation in the

Official Gazette, specii6y.

(2) The State charges referred to in sub-section (1) shall be collected,

in the manner as may by prescribed, by the Board or by an officer as may

be authorized by the Board or the State Government and all such moneys

shall be credited to the Consolidated Fund of the State."

(Emphasis supplied)

7.5 Hence, in view of the judgement of Hon'ble Supreme Court and

provisions of Section 22A of the Gujarat Maritime Act, 1981 stipulating that

any amount collected after 1.4.2008 by Gujarat Maritime Board can be

considered as statutory levy only and service tax liability thereon may not

arise, if such collected amount is required to be credited to the

Consolidated Treasury Fund of the State of Gujarat.

7.6 I further find that CBEC vide Circular No. 89/7/2006-ST dated

18.12.2006 has also clarified as under: -

2. The issue has been examined. The Board is of the view that the activities performed by the sovereiqn/public authorities under the provision of law are in the nature of statutory obligations which are to be fulfilled in accordance with law. The fee collected by them for performinq such activities is in the nature of compulsory levy as per the provisions of the

Page No. 12 of 14

Appeal No V2177/RAJ/2015

13

relevant statute; and it is dëpósited into the GOvernment Treasury. Such activity is purely in public interest and it is undertaken as mandatory and statutory function. These are not in the nature of service to any particular individual for any consideration. Therefore, such an activity performed by a sovereign/public authority under the provisions of law does not constitute provision of taxable service to a person and, therefore, no service tax is leviable onsuch.activities.

7.7 In view of abovefacts and legal position, .1 am of considered view that

the appellant is not liable to pay servicetx on scrutiny fee and supervision

fee charged by them to perform sover&gn functions of the State and the

fees received cannot be considered as consideration for payment of

service tax towards rendering of. any service as the entire amount has been

credited to the consolidated fund of the Government of Gujarat and has not

been retained by the appellant. Hence, I hold that the impugned order

confirming demand of service tax on the said fees is not correct, legal and

proper.

8. I also find that the impugned SCN dated 25.3.2013 demanded

service tax for 'port service' defined under Section 65(82) of the Act. I find

that the fees received by the appellant is towards construction of Single

point mooring system and hence, this was in relation to "construction" of

"an infrastructure" (in the form of Civil Structure) in the sea and the fees

were charged towards approval of the design (i.e. scrutiny fees) and

supervision of the erection (i.e. supervision charges). Thus, the basic

activity carried out by the appellant was for construction of an infrastructure

in the port. Scrutiny of plans, design and lay outs of a proposed

infrastructure in port (in sea) cannot be considered in relation to the

vessels or goods. Similarly, supervision of the said construction/erection of

structure i.e. Single point mooring systems is no way related to vessels or

goods. The fact that said SPM is to be used by the vessels after its

erection does not mean that the appellant has provided services in relation

to vessels. Therefore, the logic applied by the adjudicating authority is out

of context and not legal and proper at all. Thus, I find force in the

appellant's argument that the ingredients of Port Services in relation to "a

vessel or goods" are not available in the activity of scrutiny/approval of

plan and supervision of erection of the infrastructure undertaken by the

appellant. I, therefore, hold that the demand confirmed, interest ordered

Page No. 13 of 14

C .:/7/R/iJ/2O15

and penalty imposed is hs not: provided any

port services.

9. In view of above, i :H th ç:ugned ord& nd allow the

appeal filed by the appoant.

S. d

9.1. The appeal filed by the p:zr: p'sed off in above terms.

By Speed Post To,

(JRT c1) 131Lc*c! (34)

Gujarat Maritime Board, Sikka, Saru Section ROad, Jamnagar

_5_ 1T'*cHcIJ-

5TPRH

Copvto: 1) The Principal Chief Commissioner, CGST & Central Excise, Ahmedabad

Zone, Ahmedabad for kind information please.

2) The Commissioner, CGST & Central Excise, Rajkot Commissionerate, Rajkot for necessary action.

3) The Dy./Asstt. Commissioner, COST & Central Excise Division-I, rnnagar for necessary action.

Guard File.

Page No. 14 of 14