Paradip Port Trust Vs Commissioner of CGST & Excise (CESTAT Kolkata)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata considered an appeal against an Order-in-Original dated 24 October 2017, whereby the Commissioner, CGST & Central Excise, Bhubaneswar, had confirmed a demand of service tax under the category of “Declared Service” under Section 66E(e) of the Finance Act, 1994 for the period 2013-14, pursuant to a Show Cause Notice dated 1 August 2016.
The appellant, an autonomous body under the Ministry of Ports, Shipping & Waterways, provides port services, including pilotage, berth hire and licence of plots, for which service charges are recovered in accordance with the Scale of Rates notified by the Tariff Authority of Major Ports, and applicable service tax is collected and deposited. This aspect was not disputed.
The dispute arose from the appellant’s Berth Reservation Scheme, introduced through an Office Order dated 7 January 2012, under which specified users were given priority berthing. The scheme required users to commit to a Minimum Guarantee Tonnage (MGT). If the committed quantity was not achieved, the appellant was entitled to encash the Bank Guarantee equivalent to the wharfage applicable to the shortfall in the MGT quantity as a penalty.
