Kandla Port Trust ( KPT) entered into a contract with Essar Oil Limited ( Essar), where under Essar was to install/ create various new port-related facilities in KPT water limits and also in the land area of KPT. The agreement was to remain in force for 30 years, and Essar, after creating all the Port related infrastructure, was to hand over the same to KPT free of cost after 60 months. KPT extended to Essar a discount of 51.43% of the applicable rate of charges for berthing and wharfage.
Based on the above facts, the department issued a show cause notice alleging that the appellant ( KPT) provided service under the category of Port service to Essar under a contract and undervalued the services to the extent of 48.57 % of the actual standard rates notified by the appellant.
Another issue raised by the department related to the failure of the appellant to pay service tax on the rental charges recovered by them from Essar by providing a jetty and leave-way facility on a lease rent basis. As per the allegation in the show cause notice, the appellant was liable to pay service tax on less ret received by them during the construction period under the service category of Renting of immovable Property.
On both the above counts, a total demand of about Rs. 5.00 crores was raised by the department thru two show cause notices (the first invoking extended period and the second follow-up notice for the normal period ) which were confirmed along with interest and penalties by the Commissioner by a common order.
The Hon’ble Tribunal, after hearing both sides at length, and taking note of the precedent judgements, set aside the impugned order and allowed the appeals.
The Appellant ( KPT) was represented by Mr Shailesh Sheth, Advocate for M/s SPS LEGAL.
Share this content: