Kakinada Seaports Ltd Vs Commissioner of Central Excise & Service Tax (CESTAT Hyderabad)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad Bench, allowed two appeals filed by the appellant challenging orders confirming service tax demands under the categories of Business Auxiliary Service (BAS) and Port Services. The first order dated 25.09.2012 confirmed service tax of ₹84,40,687 along with penalty under Section 78 for the period from 01.07.2006 to 31.03.2012. The second order dated 30.09.2015 confirmed service tax of ₹98,14,521 under BAS for April 2012 to June 2012 and under “services” for the period July 2012 to September 2013.
The appellant operates a port under a concessionaire agreement dated 19.03.1999 with the Government of Andhra Pradesh (GOAP). Under the agreement, the appellant is engaged in providing port-related services and collects charges for such services. The revenue generated is shared between the appellant and the GOAP in terms of the agreement. The appellant was discharging service tax on the entire income received by the concessionaire, including amounts otherwise shareable between the appellant and the GOAP.
The department examined the agreement and observed that the appellant was undertaking activities relating to coordination, implementation, and maintenance entrusted by the GOAP. According to the department, the appellant received an additional amount equal to 15% over and above the actual expenditure incurred for such activities. The department treated this 15% amount as consideration received for services rendered and classified it as taxable under Business Auxiliary Service and Port Services. It was alleged that the appellant acted like a commission agent on behalf of the GOAP, implementing various functions and receiving the additional amount as commission.
