Commissioner of Central Excise, Customs and Service Tax, Ernakulam v. Lotus Shipping Ltd.

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: K. Vinod Chandran, J.
T. R. Ravi, J.
Judgment Date: 2020-11-10
Court Decision / Holding: The Kerala High Court held that there was no substantial question of law arising from the three appeals and rejected them. Consequently, the CESTAT orders (where applicable) stood, and the appeals were dismissed.
Final Disposition: Appeals dismissed

Parties to the Case

Appellants / Petitioners

The Commissioner of Central Excise, Customs and Service Tax, Ernakulam

Respondents

M/S. Lotus Shipping Ltd.

Legal Representation & Advocates

Counsels for Petitioners

• Sri. John Varghese, SC, Central Board of Excise & Customs
• Sri. Ramavarma Reghunathan Thamburan, SC, Central Board of Excise

Counsels for Respondents

• Sri. Anil S. Raj, Adv.
• Adv. Anila Peter
• Adv. K.N. Rajani
• Adv. Radhika Rajasekharan P.
• Adv. J. Vivek George
• Adv. Anil D. Nair

Case Synopsis & Summary

Three Central Excise appeals (C.E. Appeal Nos. 16, 17 and 19 of 2015) before the Kerala High Court concern two services—Cargo Handling Services and Port Services—carried on by Lotus Shipping Ltd. across three assessment periods. Show-cause notices proposed levy on both services in each period, with the adjudicating authority dropping the Cargo Handling levy in two periods while upholding it for Port Services; in the third period, the authority confirmed levies for both Cargo Handling and Port Services. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled in Lotus Shipping’s favour on Cargo Handling, relying on the Tribunal’s decision in Lee & Mur Head Pvt. Ltd. v. CST, Bangalore (2009 (14) S.T.R. 348 (Tri. Bang.)) which had become final and binding on the revenue. On Port Services, the revenue relied on a circular defining “other port services” to include all port services without a precondition of authorization; however, the circular was prospective, and the assessee’s activities predated it. The High Court concluded that there was no substantial question of law arising from the three appeals and dismissed them, effectively upholding the CESTAT’s conclusions where applicable. The decision addresses the interplay of prior Tribunal precedents and circular-based definitions in the taxability of port-related services.”

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellants argued, in essence, that the Cargo Handling Services liability was correctly determined by the CESTAT, which had relied on the binding Tribunal decision in Lee & Mur Head Pvt. Ltd. v. CST, Bangalore, a ruling that had become final. They highlighted that in two periods the adjudicating authority had dropped the Cargo Handling levy, whereas for Port Services the revenue position hinged on a circular defining ‘other port services’ to cover all services within the Port; the circular, however, was prospective and not applicable to activities carried on prior to its issuance. The applicants contended there was no valid legal basis to extend taxation to pre-circular port-related activities and that no substantial questions of law arose from the appeals.

Contentions of Respondents

The respondents contended that the revenue’s position on Port Services was supported by the circular's broader interpretation of ‘other port services’; they urged that the CESTAT’s findings on Cargo Handling, based on the Lee & Mur Head precedent, were correct and consistent with final tribunal authority, and argued that the pre-circular activities for Port Services could be addressed through the circular’s scope.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Lee & Mur Head Pvt.Ltd. v. CST Bangalore	2009(14) S.T.R.348 (Tri Bang)	Positive	The High Court notes the CESTAT relied on this binding Tribunal decision, which had already become final and bound the revenue.

Extracted Judgment Text

Exact text extracted from official judgment records.

C.E.A.Nos.16, 17 & 19 of 2015 1 # **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **TUESDAY, THE 10TH DAY OF NOVEMBER 2020/19TH KARTHIKA, 1942** **C.E.Appeal.No.16 OF 2015** **AGAINST THE ORDER/JUDGMENT IN ST/156/2009 DATED 02-02-2015 OF CUSTOMS, EXCISE & SERVICE TAX APP.TRIBUNAL, BANGALORE** ## **APPELLANT/S:** **THE COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, C.R. BUILDING, I.S. PRESS ROAD, ERNAKULAM, COCHIN - 682 018.** **BY ADVS. SRI.JOHN VARGHESE, SC, CENTRAL BOARD OF EXCISE & CUSTOMS SRI.RAMAVARMA REGHUNATHAN THAMBURAN, SC, CENTRAL BOARD OF EXCISE** ## **RESPONDENT/S:** **M/S. LOTUS SHIPPING LTD., 3/34, 4TH FLOOR, GCDA COMPLEX, MARINE DRIVE, COCHIN - 682 031.** **R BY ADV. SRI.ANIL S.RAJ ADV. SMT.ANILA PETER ADV. SMT.K.N.RAJANI ADV. SRI.RADHIKA RAJASEKHARAN P. ADV. SRI.J.VIVEK GEORGE ADV. SRI.ANIL D. NAIR** **THIS CENTRAL EXICISE APPEAL HAVING BEEN FINALLY HEARD ON 10-11-2020, ALONG WITH C.E.Appeal.17/2015, C.E.Appeal.19/2015, THE COURT ON 10-11-2020 DELIVERED THE FOLLOWING:** C.E.A.Nos.16, 17 & 19 of 2015 2 # **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **TUESDAY, THE 10TH DAY OF NOVEMBER 2020 / 19TH KARTHIKA, 1942** ## **C.E.Appeal.No.17 OF 2015** **AGAINST THE ORDER/JUDGMENT IN ST/597/2010 DB DATED 02-02-2015 OF CUSTOMS, EXCISE & SERVICE TAX APP.TRIBUNAL, BANGALORE** ## **APPELLANT/S:** **THE COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, C.R.BUILDING, I.S.PRESS ROAD, ERNAKULAM, KOCHI-682 018.** **BY ADVS.** **SRI.JOHN VARGHESE, SC, CENTRAL BOARD OF EXCISE & CUSTOMS SRI.RAMAVARMA REGHUNATHAN THAMBURAN, SC, CENTRAL BOARD OF EXCISE** **RESPONDENT/S:** **M/S.LOTUS SHIPPING LTD., 3/34, 4TH FLOOR, GCDA COMPLEX, MARINE DRIVE, KOCHI-682 031.** **R BY ADV. SRI.ANIL S.RAJ ADV. SMT.ANILA PETER ADV. SMT.K.N.RAJANI ADV. SRI.RADHIKA RAJASEKHARAN P. ADV. SRI.J.VIVEK GEORGE ADV. SRI.ANIL D. NAIR** **THIS CENTRAL EXICISE APPEAL HAVING BEEN FINALLY HEARD ON 10-11-2020, ALONG WITH C.E.Appeal.16/2015, C.E.Appeal.19/2015, THE COURT ON 10-11-2020 DELIVERED THE FOLLOWING:** C.E.A.Nos.16, 17 & 19 of 2015 3 # **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **TUESDAY, THE 10TH DAY OF NOVEMBER 2020 / 19TH KARTHIKA, 1942** **C.E.Appeal.No.19 OF 2015** **AGAINST THE ORDER/JUDGMENT IN APPEAL NO.ST/172/2007 – DB DATED 02.02.2015 OF CUSTOMS, EXCISE & SERVICE TAX APP.TRIBUNAL, BANGALORE** ## **APPELLANT/S:** **THE COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, C.R.BUILDING, I.S.PRESS ROAD, ERNAKULAM, COCHIN 682 018.** **BY ADVS.** **SRI.JOHN VARGHESE, SC, CENTRAL BOARD OF EXCISE & CUSTOMS SRI.RAMAVARMA REGHUNATHAN THAMBURAN, SC, CENTRAL BOARD OF EXCISE** ## **RESPONDENT/S:** **M/S.LOTUS SHIPPING LTD., 3/34, 4TH FLOOR, GCDA COMPLEX, MARINE DRIVE, COCHIN - 682 031.** **R BY ADV. SRI.ANIL S.RAJ ADV. SMT.ANILA PETER ADV. SMT.K.N.RAJANI ADV. SRI.RADHIKA RAJASEKHARAN P. ADV. SRI.J.VIVEK GEORGE ADV. SRI.ANIL D. NAIR** **THIS CENTRAL EXICISE APPEAL HAVING BEEN FINALLY HEARD ON 10-11-2020, ALONG WITH C.E.Appeal.16/2015, C.E.Appeal.17/2015, THE COURT ON 10-11-2020 DELIVERED THE FOLLOWING:** C.E.A.Nos.16, 17 & 19 of 2015 4 ## **J U D G M E N T** ## **K.Vinod Chandran, J.** The three appeals are from three periods and deal with two issues; Cargo Handling Services and Port Services, said to have been carried on by the appellants. Show cause notices were issued separately for the three periods, proposing levy on both these aspects. In two periods from which C.E.Appeal Nos.16 and 17 of 2015 arise, the adjudicating authority itself dropped the proposal to levy tax on Cargo Handling Services, but affirmed that with respect to Port Services. In C.E.A.No.19 of 2015 the adjudicating authority affirmed the proposal with respect to both Cargo Handling and Port Services. The appellant was in appeal before the Customs Excise and Service Tax Appellate Tribunal (CESTAT). 2. The Tribunal, with respect to Cargo Handling Services, in the order from which C.E Appeal 19 of 2015 arise, found in favour of the appellant, relying on the decision of the Tribunal in **Lee &** ## **- Mur Head Pvt.Ltd. v. CST Bangalore [2009(14) S.T.R.348 (Tri** **Bang)].** The said decision had become final and the revenue was bound by the same. The Tribunal also found that in two periods, when the asessee was carrying on the very same activity the adjudicating authority itself had dropped the proposal to levy the appellant for Cargo Handling Services. C.E.A.Nos.16, 17 & 19 of 2015 5 3. The other aspect was with respect to Port Services. The assessee had hired barges and was transporting goods from the Port to Binani Zinc Ltd. and FACT. For all these periods the assessee did not own the barges nor was the assessee an authorised operator of the Port. The assessee had hired barges from SICL, who was authorised by the Port, in which barges transporting was carried out. The revenue relied on a circular which clarified the definition of “other port services” to provide for all services within the Port without the pre-condition of there being a requirement of an authorisation. However, the said circular was prospective in application and the assessee's activities were carried on prior to it. We do not find any question of law arising from the three appeals. We hence, reject the appeals. Sd/- ## **(K.VINOD CHANDRAN, JUDGE)** Sd/- **(T.R.RAVI, JUDGE)** DG/10.11.2020 C.E.A.Nos.16, 17 & 19 of 2015 6 ## **APPENDIX OF C.E.Appeal 16/2015** ## **PETITIONER'S/S EXHIBITS:** **ANNEXURE A1 TRUE COPY OF THE SHOW CAUSE NOTICE NO. 59/2006 ST DATED 12/10/2006 ISSUED BY THE DEPARTMENT TO THE RESPONDENT.** **ANNEXURE A2 TRUE COPY OF THE ORDER IN ORIGINAL NO.3/2007-ST DATED 15/02/2007 ISSUED BY THE ADJUDICATING AUTHORITY.** **ANNEXURE A3 TRUE COPY OF THE SHOW CAUSE NOTICE NO.135/2007 DATED 23/10/2007 ISSUED BY THE DEPARTMENT TO THE RESPONDENT.** **ANNEXURE A4 TRUE COPY OF THE ORDER IN ORIGINAL NO.7/2009 ST DATED 22/01/2009 ISSUED BY THE ADJUDICATING AUTHORITY.** **ANNEXURE A5 TRUE COPY OF THE SHOW CAUSE NOTICE NO.143/2008 DATED 16/10/2008 ISSUED BY THE DEPARTMENT TO THE RESPONDENT.** **ANNEXURE A6 TRUE COPY OF THE ORDER IN ORIGINAL NO.3/2010 ST DATED 07/01/2010 ISSUED BY THE ADJUDICATING AUTHORITY.** **ANNEXURE A7 TRUE COPY OF THE FINAL ORDER NO. 2013220134/2015 DATED 02/02/2015 ISSUED BY THE CESTAT, BANGALORE.** C.E.A.Nos.16, 17 & 19 of 2015 7 ## **APPENDIX OF C.E.Appeal 17/2015** ## **PETITIONER'S/S EXHIBITS:** **ANNEXURE A1 TRUE COPY OF THE SHOW CAUSE NOTICE NO. 59/2006 ST DATED 12/10/2006 ISSUED BY THE DEPARTMENT TO THE RESPONDENT.** **ANNEXURE A2 TRUE COPY OF THE ORDER IN ORIGINAL NO.3/2007-ST DATED 15/02/2007 ISSUED BY THE ADJUDICATING AUTHORITY.** **ANNEXURE A3 TRUE COPY OF THE SHOW CAUSE NOTICE NO.135/2007 DATED 23/10/2007 ISSUED BY THE DEPARTMENT TO THE RESPONDENT.** **ANNEXURE A4 TRUE COPY OF THE ORDER IN ORIGINAL NO.7/2009 ST DATED 22/01/2009 ISSUED BY THE ADJUDICATING AUTHORITY.** **ANNEXURE A5 TRUE COPY OF THE SHOW CAUSE NOTICE NO.143/2008 DATED 16/10/2008 ISSUED BY THE DEPARTMENT TO THE RESPONDENT.** **ANNEXURE A6 TRUE COPY OF THE ORDER IN ORIGINAL NO.3/2010 ST DATED 07/01/2010 ISSUED BY THE ADJUDICATING AUTHORITY.** **ANNEXURE A7 TRUE COPY OF THE FINAL ORDER NO. 2013220134/2015 DATED 02/02/2015 ISSUED BY THE CESTAT, BANGALORE.** C.E.A.Nos.16, 17 & 19 of 2015 8 ## **APPENDIX OF C.E.Appeal 19/2015** **PETITIONER'S/S EXHIBITS:** **ANNEXURE A1 TRUE COPY OF THE SHOW CAUSE NOTICE NO. 59/2006 ST DATED 12/10/2006 ISSUED BY THE DEPARTMENT TO THE RESPONDENT.** **ANNEXURE A2 TRUE COPY OF THE ORDER IN ORIGINAL NO.3/2007-ST DATED 15/02/2007 ISSUED BY THE ADJUDICATING AUTHORITY.** **ANNEXURE A3 TRUE COPY OF THE SHOW CAUSE NOTICE NO.135/2007 DATED 23/10/2007 ISSUED BY THE DEPARTMENT TO THE RESPONDENT.** - **ANNEXURE A4 TRUE COPY OF THE ORDER IN ORIGINAL NO.7/2009 ST DATED 22/01/2009 ISSUED BY THE ADJUDICATING AUTHORITY.** **ANNEXURE A5 TRUE COPY OF THE SHOW CAUSE NOTICE NO.143/2008 DATED 16/10/2008 ISSUED BY THE DEPARTMENT TO THE RESPONDENT.** **ANNEXURE A6 TRUE COPY OF THE ORDER IN ORIGINAL NO.3/2010 ST DATED 07/01/2010 ISSUED BY THE ADJUDICATING AUTHORITY.** **ANNEXURE A7 TRUE COPY OF THE FINAL ORDER NO. 2013220134/2015 DATED 02/02/2015 ISSUED BY THE CESTAT, BANGALORE.**