Judgment

R.F. Nariman, J.

1. The issue raised in the present civil appeals is with regard to service tax payable on wharfage charges. The respondent -M/s Gujarat Maritime Board (hereinafter referred to as “GMB”) is a statutory body constituted under the Gujarat Maritime Board Act, 1981 (hereinafter referred to as “GMB Act”). This authority administers and operates minor ports in the State of Gujarat. GMB entered into an agreement dated 28.2.2000 with Larsen & Toubro which ultimately became M/s Ultratech Cement Limited (hereinafter referred to as “UCL”) whereby a licence was granted to UCL to construct and use a jetty for landing of goods and raw materials manufactured by UCL in their cement factory which was situate close to the said jetty at Pipavav port. As the true construction of this agreement is the bone of contention between the parties, we will refer to it in a little detail hereafter.

2. It is alleged that service tax was payable on wharfage charges by GMB collected by them from their licensee UCL under the taxable category of “port services”. The revenue authorities initiated investigation against GMB for under-valuation and short payment of service tax. Ultimately, a show c