2026-VIL-480-CESTAT-AHM-ST
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SERVICE TAX CESTAT Cases

Service Tax - Taxability of supply of water under "Port Services" - The appellant is engaged in providing ship chandelling services to various ships calling at ports and raised debit notes to parties/owners for reimbursement of actual expenses incurred in supplying fresh water to the vessels - Whether the supply of water by the appellant to various vessels falls under sale of water or supply of water service under "Port Services" - HELD - Prior to 01.07.2010, the supply of water by the appellant within the port area is covered under the category of "Port Services" and is leviable to service tax, as per the CBIC clarification dated 09.07.2001. The invoices do not indicate a sale and purchase of water, but rather show that the fresh water was supplied by barge which would include cost of procurement, transportation and other costs incurred in relation to provision of service in the port - In the case of Jaisu Dredging & Shipping wherein it was held that the supply of water to vessels, where the port's authorization is required, would be considered as part of "Port Services" and not merely a sale of goods – The appellant could not produce any evidence to show that they were acting as a pure agent and providing service on behalf of another person. Therefore, claim of the appellant as pure agent is liable to be rejected - Accordingly, the demand of service tax for the period prior to 01.07.2010 is upheld, but set aside the penalty imposed under Section 78 considering the absence of mens rea, while affirming the penalty under Section 77 - The appeal is disposed of
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