By TIOL News Service

MUMBAI, JAN 14, 2019: THIS is a Revenue appeal against the order passed by the Principal Commissioner of Service Tax-I, Mumbai.

The facts are that the respondent is registered with Service Tax Department for providing taxable service under the category of "Port Services".

During CERA audit, it was observed that the respondent had entered into agreement with M/s. ONGC, permitting it to lay pipelines for carrying within the Port Trust limit on land and sea. The pipelines are buried under the land and concealed within the Port Trust limits. In consideration for allowing ONGC to lay sub-marine pipelines through the Port Trust limits, the respondent was paid compensation.

Contending that the compensation received by the respondent from ONGC is taxable under the category of Port Services, demand notice was issued.

However, the proceedings were dropped by the adjudicating authority.

Revenue has assailed this order on the ground that the services should appropriately be classifiable under the taxable category of "Renting of Immovable Property" service.

The Bench considered the submissions and observed -

+ Show cause notice was issued to the respondent, seeking for confirmation of the service tax demand under Port Services.

+ For the first time, Revenue through this present appeal has raised a new ground regarding classification of service under the taxable entry of Renting of Immovable Property Service.

+ Since classification under such service was never the subject matter of dispute before the lower authority and no specific show cause notice was issued to the respondent, alleging classification under such service, the Revenue is not permitted to take such new stand for deciding the appeal in its favour.

Concluding that there is no merit in the appeal filed by the Revenue, the same was dismissed.

(See 2019-TIOL-146-CESTAT-MUM)