Johnny and Service Tax Refund [Series- II] Part 3: ?CONDITIONS RELATING TO PORT SERVICES’ | Tax Refund Airport

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Johnny and Service Tax Refund [Series- II]

Part 3: ‘CONDITIONS RELATING TO PORT SERVICES’

By: –

CA. Pradeep Jain

Mayank Palgauta

Visit us at: www.capradeepjain.com

In continuation of the series of previous two articles, elaborating the difficulties in getting the refund claim due to conditions relating to Invoice and CHA service, we in this article are attempting to present the problems existing in the Service tax refund mechanism relating to Port services. This complete state of affairs is humorously picturised by the way of poems and conversation between Johnny (an Exporter-assessee) and his father. This Endeavour is just to bring out the problems faced by exporters.

Johnny and Jill went up the hill, to get the refund order
Johnny came back with a lack
And Jill came hopeless after.

Presently, assesses are claiming refund orders on the Port Services which are gigantic knotty services in getting refund. The refunds claimed by the assessees as against their exports are their constitutional rights but are being declined by the departmental authorities on various arguments which are of no importance and value less. The various reasons on which the department is refusing these refund claims on the said service are highlighted as under: -

Johnny-Johnny!  Yes papa!

Got the refund?

No Papa,

Telling lies?

No Papa,

What’s the reason?

This papa: -

Johnny says:  I went to the department to get the refund for Port Services but department said: -

Johnny-Johnny go away,
Come again another day.
Your refund order has following Flay: -

The claim of refund made in respect of Port Services are not admissible to us as services rendered by the service providers do not fall under the purview of Port services as they are neither the ports on which the Major Port Trust 1963 Act applies nor the other ports which are governed by the Indian Ports Act, 1908.

Johnny’s Submission: -

We submitted that the definition of port services is proposed to be amended from the Budget (2010-11) in which it is clarified that all the services which are rendered within a port are covered under the category of port services. The definition will read as follows:-

Port services “means any service rendered within a Port or other port, in any manner.”

Thus, the port services provided entirely in the port area will be covered under the same. The learned adjudicating authority has taken the view that service provider should be a port according to the provisions of section 65 (81) of the Finance Act, 2004. But the section 65(82) ibid clearly says that any service which is provided and rendered within the port area is covered under Port services. In this section it is nowhere provided that service provider must be a Port or other Port. The only condition for any service to be a port service is that it is to be rendered within a port or other port. In our case also the services are provided within the port area hence these are very much covered under the category of Port Services. Hence contention of the department that the service providers do not fall under the purview of Port service is not tenable as there is no such requirement in the provision of section 65(82).

Johnny says:  I went to the department next day again with the amended section but department said: -

Johnny-Johnny go away,
Come again another day.
Your refund order has following more flay: -

The next objection from the department was that the notification asks that the invoices, issued by the service providers on which refund is claimed, do not mention: -

(A)  Whether the service provider has been authorized by the concerned port for providing ‘Port Services’,

(B) Whether the service provider is registered under the provisions of Finance Act, 1994 under the category of ‘Port Services’ falling under section 65(105)(zzl) of the Finance Act, 1994.

Johnny’s Submission: -

In respect of above allegations, we submit that these conditions are also saying the same fact that the service provider should be a port but this is not required in the law as it merely says that services should be rendered within a port. As such the services which are rendered within the port are to be considered as port services. Further the above mentioned conditions are not provided in the notification no. 17/2009-ST hence we are not liable to fulfill these conditions. Hence the allegations of Learned Authority that the above mentioned conditions are not fulfilled are not tenable and liable to be quashed. Since the major condition i.e. services are to be provided within the port/other port is fulfilled by us as such the refund should be granted.

Further, the TRU letter no. 334/1/2010-TRU dated 26.02.2010 has clarified the above provisions as under:-

The definitions of the taxable services, namely the ‘Airport Services’ section 65 (105) (zzm)], the ‘Port Services’ [section 65 (105) (zn)] and the ‘Other Port Services’ [section 65 (105) (zzl)] are being amended to provide that,-

(a) all services provided entirely within the airport/port premises would fall under these services; and

(b) an authorization from the airport/port authority would not be a pre-condition for taxing these services.

It has been further clarified in Annexure B to the said TRU Letter that the definition of port services have been amended in order to remove difficulties of non classification of service provided at the port under the port services and of non-issuance of authority/permission letters by Port authorities to a service provider authorizing him to undertake a particular task.

The mere fact that the service providers are not registered under the above category would not be a reason to deny the credit. It has been held in the case of Cbay Systems (India) Pvt Ltd Vs CCE, Mumbai [2010-TIOL-1188-CESTAT-MUM] that while granting the refund to exporters on taxable services, it is simple required that the services are received and used for export. The verification of registration certificate as to under which category the service provider is registered is not required. Thus, applying the ratio of this decision, refund of these services, being availed at port, should be allowed to us.

Johnny says:  I went to the department next day again with the above submission but department said: -

Johnny-Johnny go away,
Come again another day.
Your refund order has following more flay: -

The invoices, issued by the service providers on which exemption is claimed, do not mention the following: -

(i)    Name of the Port where the services have been provided,

(ii) The amount of Service Tax paid/payable by the service provider under Port Services

Johnny’s Submission: -

In this regards it is

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