No Service Tax Liability Demandable on Water front Royalty charge recovered from licensee are in nature of statutory levy which credited to consolidated fund of State of Gujarat: CESTAT [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the service tax liability cannot be demanded on the waterfront royalty charge recovered from the licensee is like statutory levy which was credited to the consolidated fund of State of Gujarat. 

State Charges Gog Jafrabad Port, the appellant assessee registered with the Service Tax department under the category of port services and has been paying Service Tax regularly under the port service rendered by them to various clients. 

The assessee appealed against the order passed by the adjudicating authority for confirming the Service Tax demand of Rs. 1,52,52,812/-, under Section 73 of the Finance Act 1994. 

V.H.P Singh, Jigar Shah and Ambar Kumrawat, the counsels for the assessee contended that the waterfront royalty (WFR) was to be credited to the consolidated fund of the state. Thus, the WFR is like tax levied by the State Government in the exercise of the sovereign function, and therefore, the same cannot be subjected to Service Tax by treating the said sovereign function as a performance of taxable service. 

P K Singh, the counsel for the department contended that the assessee had not paid the Service Tax on the taxable amount received by them under port services during the period from 2006-07 to 2009- 10.

The Bench observed that in the case of Gujarat Maritime Board Vs. CCE- Bhavnagar, the court held that the waterfront royalty charge recovered from the licensee is in the nature of statutory levy and proceeds such levy are credited to the consolidated fund of the State of Gujarat and same cannot be subjected to Service Tax liability. 

The two-member bench comprising Ramesh Nair (Judicial) and C L Mahar (Technical) held that as per Board Circular No. 89/7/2006-ST any mandatory statutory levies that are deposited into the Government and which are like statutory fee/levy cannot be subjected to Service Tax. 

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates