Port/Airport Services: At Great Expansion

PORT/AIRPORT SERVICES: AT GREAT EXPANSION

Prepared By:

CA Pradeep Jain,

Monu Toshniwal

The introduction of Budget 2010 has brought a drastic change in the definition of the Port/Airport services which will definitely expand the scope of accepting the refund of service tax to the exporters.

The change can be compared by studying the earlier and amended definitions. The earlier definition of Port services as given at Section 65(82) (zn) of the Finance Act, 1994 which is produced as follows:-

“Port services mean any service rendered by a port or other port or any person authorized by such port or other port, in any manner, in relation to a vessel or goods”.

The definition of Airport services defined in Section 65(105) (zzm) defines taxable service as:-

“Any service provided or to be provide to any person by airport authority or any person authorised by it, in an airport or a civil enclave.”

The above definitions impose the condition on service provider to be authorised by the concerned Authorities for rendering the services at respective area. In the absence of such authority these service providers were to be fall under BAS, BSS and CHA to provide the services at port/airport. As such, the refunds of such services were denied on the ground that the services are not covered under the specified services and the service providers were not authorised to provide such services. But on fact, there was no procedure for specifically authorizing the service providers which has also been accepted by the Board authorities.

Now in present scenario the definition has widened its scope which is produced as follows:-

Port services “means any service rendered within a Port or other port, in any manner.”

Airport services “means any service provided or to be provide in an airport or a civil enclave”.

Therefore the word ‘any person authorised’ has been deleted from the definition in order to remove ambiguity and clarify that all services provided entirely within the port/airport area would fall under these services. This is because the service providers were not really authorised and the authorities seldom issue authority/permission letter without any proper authorization to provide the services. Now the condition of pre-authorisation will not be levied on the service providers falling under categories of BSS, BAS & CHA for providing services and refund of service tax will be granted to exporters for the services availed from such categories.

Furthermore the aim of expanding the scope of definition is to consolidate various kinds of services to fall under one common head and remove the difficulties so ariseing by classification of such services. As in some places, there is a practice of performing all the services at port/airport area so concerned with the export of goods.

Even this amendment and clarification by letter of TRU will be very helpful for getting refund to exporters which is being hanged at different stages by the departmental authorities.

Overall reviewing the depth of the amendment the impact of the same can be squarely applied to the proceedings pending at different levels of jurisdiction. Moreover, the benefit of refund will be granted relieving the exporter from the burden of proving the nexus and authentication of services so availed in relation with the export goods.

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