2025-VIL-1910-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax – Section 65(105)(zn) of Finance Act, 1994 – Receipt of despatch money – Tax liability – Appellant is engaged in manufacture of various products, for which, it imported raw materials on CIF contracts – Under agreements, Appellant was to unload the cargo from vessel in a particular period of time. If goods were unloaded faster than time provided for in contract, Appellant became entitle to receive despatch money – Department issued show cause notice proposing to subject this despatch money to service tax under category of Port Service – Commissioner confirmed demand as proposed in show cause notice – Whether Appellant has rendered any taxable service in respect of despatch money – HELD – Port Service under Section 65(82) of the Act means “any service rendered within a port or other port in any manner”. Word “service” occurring in Section 65(82) of the Act does not connote a taxable service, but merely a service. No party to agreement under consideration, that is, neither importer nor transporter performed any activity which would fall within meaning of word “service” as occurring in definition of term “Port Service” under Section 65(82) of the Act. Payment of demurrage or despatch money were not consideration for rendering a service, but represented only a condition to contract of purchase. Appellant would not be said to have rendered any taxable service in respect of both demurrage and despatch money. In view of these conclusions, levy does not survive for any part of tax periods for which the adjudication was made. Impugned order passed by Commissioner is set aside – Appeal allowed
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