Order Date – 13 June 2023

Parties: Dahej Harbour Infrastructure Ltd Vs Commissioner of Central Excise & ST, Vadodara-ii

Facts – 

• The Appellant, Dahej Harbour Infrastructure Ltd, are subsidiary company of M/s. Hindalco Industries Limited. The appellant have entered into a separate agreement for using M/s. Hindalco Industries Limited’s equipments at jetty.
• The appellant have to pay an amount of Rs. 20 per Metric ton for use of equipments which belongs to M/s. Hindalco Industries Limited when cargo belonging to third parties namely M/s. GACL and M/s. GNFC is undertaken by the appellant. The cargoes of Rs. 20 per Metric ton are names as Equipment Operating Charges and same is shown on the recipient bills of M/s. GACL and M/s. GNFC.
• A show cause notice was issued to the appellant alleging that taxable value as regard to services provided by the appellant to M/s. Hindalco Industries Limited has not been worked out correctly as the appellant have failed to include the value of Rs. 20 per Metric ton in the service charges.

Issue – 

• Whether the notional rental value of jetty equipments need to be included into the taxable value of the service recipient?

Order – 

• The Tribunal observed that the gross amount charged by the service provider namely the appellant from M/s. Hindalco Industries Limited is the amount which is the invoice value of the service which have been paid by HIL to the appellant. Apart from this, no other amount or consideration has flown back to this appellant for providing “such” service i.e. port service/cargo handling service, etc.
• Further the service which have been provided by the appellant at the Jetty need not to include the notional charges of jetty, crane, goods handling equipments, etc because by no stretch of imagination these cannot form the part of the service which is being undertaken by the appellant at the jetty.
• In the case of CST Vs. Bhayana Builders Pvt. Limited - 2018 (10) GSTL 118 (SC) it has been held that value of taxable service cannot be dependent on the value of the goods supplied free of cost by the service recipient. Thus the value which is not part of the contract between the service provider and the service recipient cannot form the part of the taxable value of the service provided by the appellant to the service recipient.
• Hence it was held that there is no other consideration which have flown back to the appellant from the service recipient and therefore, the appellant has discharged their service tax liability correctly and as per service tax law.