Levy of service tax under the head "Port Services" - Case of Management Committee (CFH Scheme), Paradeep Port

Indian Service Tax

Clarifications

Paradeep Port

Cir. No. 44/7/2002-ST, Date: 26/06/2002

Sub:- Levy of service tax under the head "Port Services" - Case of Management Committee (CFH Scheme), Paradeep Port - Regarding.

I am directed to say that doubts have been raised as to whether Management Committee (CFH Scheme), operating at Paradeep Port is liable to pay service tax under the head "Port Services", or not.

2. The Management Committee (CFH Scheme) has been constituted under the orders of the Hon'ble Supreme Court of India to take care of the problems of the workers at Paradeep Port. The Management Committee operates under the, "Paradeep Port, Clearing, Forwarding and Handling Workers (Regulation of Employment) Scheme, 1994". The Management Committee undertakes the supply of clearing, forwarding and handling workers at the prescribed rates to the listed employers Jor clearing, forwarding and handling operations, as are decided by the Committee, in the Port area.

3. Two officers of the Paradeep Port Trust are associated with the Management Committee to oversee the administration of the Committee.

4. All the labour Contractors and handling Contractors whose services are utilized by the Management Committee are issued with labour permits/licenses by the Paradeep Port Trust.

5. As per Section 65 of the Finance Act, 1994 'Port Services' means 'any services rendered by a port or any person, authorised by a port in any manner in relation to vessels and goods'. The doubt is whether the Management Committee can be considered to have been authorised by the port for rendering its services within the port area.

6. The matter has been examined by the Board. The scope of "port services" has already been clarified earlier by the Board vide Annexure VIII to letter. F.No. B11/1/2000-TRU, dated 9/7/2001. It was,inter alia,clarified that a Dock Labour Board is liable to pay service tax on the labour charges recovered by them. The Management Committee of Paradeep Port functions like a Dock Labour Board. Further, the Contractors utilized by the Management Committee for rendering their services are issued licenses or permits by the Paradeep Port Trust to operate within the port area. It cannot, therefore, be said that the Management Committee is not authorized by the Port Trust for rendering services in relation to vessels and goods within the port area.

7. It is understood that such a system does not operate in any other port in India.

8. It is, therefore, clarified that the Management Committee is liable to pay service tax under the head "port services", for the services rendered by them within the port area in relation to vessels and goods.

Ship Repair

Cir. No. 67/16/2003-ST, Date: 10/11/2003

I am directed to say that a doubt has been raised regarding levy of Service Tax on ship repair during the dry docking by the person duly authorised in this behalf by port authorities. This involves removal of damaged parts and replacement by new parts. This may involve repairing the outside bottom area of a ShipNesse1 by supplying huge quantities of MS plates etc.

The matter has been examined, Port services means any service rendered by port or any person authorised by them, in any manner, in relation to a vessel or goods, Thus, all such services rendered, including during dry dock and repairs to the ship, are taxable which should include not only the minor repairs provided by ship chandlers but also the dry dock facilities and any repairs carriedoutto the vessels. However, the benefit of Notification No. 12/2003-ST dated 20.6.2003 would be available.