2025-VIL-682-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Port Services, Lease Rental, Limitation - The appellant was issued a show-cause notice demanding service tax on the lease rent charged by it on port users like stevedores for providing storage space in the land parcel belonging to the Port Trust. The demand was for the period from April 2004 to March 2007. The show-cause notice culminated in an order-in-original confirming the demand of Rs. 2,44,07,465/- along with interest and equal amount of penalty. The appellant filed an appeal challenging the order - Whether the lease rent charged by the Kolkata Port Trust on port users for providing storage space in the land parcel is liable to service tax under the category of "Port Services" - HELD - The lease rent charged by the Kolkata Port Trust for providing storage space in the land parcel to port users is not liable to service tax under the category of "Port Services". The Tribunal relied on the CBIC Circular No. B11/1/2001-TRU dated 09.07.2001, which had clarified that estate rentals/lease rental for land etc. are not liable to service tax as they are not services rendered in relation to goods or vessels. The Tribunal also referred to its own past rulings in the cases of Cochin Port Trust and Mumbai International Airport Private Limited, where it was held that rental income from leasing out of land/godowns is not classifiable under "Port Services" - The activity undertaken by the appellant was merely renting of immovable property, which became taxable only from 01.06.2007 under the "Renting of Immovable Property Service" - Therefore, the demand of service tax on the lease rent charged by the appellant is not sustainable - The appeal filed by the appellant is allowed - Whether the extended period of limitation under Section 73(1) of the Finance Act, 1994 was correctly invoked by the department for issuing the show-cause notice - HELD - The extended period of limitation under Section 73(1) was not correctly invoked by the department - There was nothing to substantiate the department's charge of suppression or wilful mis-statement by the appellant - The appellant was regularly filing returns and the rental income was duly accounted for in the books of account. Given the CBIC Circular clarifying the non-levy of service tax on such rental income, no case for invoking the extended period of limitation was made out.
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