Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench at Ahmedabad REGIONAL BENCH-COURT NO. 2 Service Tax Appeal No. 11127 of 2017 – DB (Arising out of OIA-RAJ-EXCUS-000-APP-194-16-17 dated 17.03.2017 passed by Commissioner(Appeals), Central Excise, Customs and Service Tax-RAJKOT)

Sea Shipping Services ……..Appellant A-1,prabhukrupa Society, Opp.

St Gregorious School, JAMNAGAR, GUJARAT VERSUS Commissioner of C.E. & S.T.-Rajkot ……Respondent CENTRAL EXCISE BHAVAN, RACE COURSE RING ROAD...INCOME TAX OFFICE, RAJKOT, GUJARAT-360001 APPEARANCE:

Shri Sharan Rayaprol, Advocate appeared for the appellant Shri Rajesh Nathan, Assistant Commissioner (AR) appeared for the respondent CORAM:

HON'BLE MEMBER (JUDICIAL), DR. AJAYA KRISHNA VISHVESHA HON'BLE MEMBER (TECHNICAL), MR. SATENDRA VIKRAM SINGH Final Order No. 10177/2026 DATE OF HEARING: 11.11.2025 DATE OF DECISION: 12.03.2026 SATENDRA VIKRAM SINGH

1. M/s. Sea Shipping Services (Appellant), Jamnagar are registered with the department under the category of port services, GTA service, clearing service, supply of tangible goods service and transportation of goods through water-ways services. During audit of their records, the officers observed that the appellant have issued debit notes, to their customers for reimbursement charges of supply of water and recovered payment of Rs.66,25,250/- on which they did not pay the requisite service tax. The above services are alleged to be covered under “Port service” as defined under Section 65(82) of the Finance Act, 1994 and therefore, SCN dated 24.09.2014 was issued to them proposing recovery of service tax of Rs.6,82,400/- under proviso to Section 73(1) of the Finance Act, 1994 along with interest under Section 75 and penalty under Section 77 and 78 of the said Act.

1.1 The said show cause notice was adjudicated by the Additional Commissioner vide order dated 29.01.2016 wherein, he confirmed the charges made in the show cause notice and also imposed an equal penalty on the appellant under Section 78 of the Finance Act, 1994 along with penalty of Rs.10,000/- under Section 77 of the said Act. Aggrieved with the said order, the appellant filed appeal before the Commissioner (Appeal) who vide impugned order dated 28.03.2017 upheld the order of the lower authority and rejected the appeal filed by the appellant. Hence, the present appeal before the Tribunal.

2. In their appeal, the appellant took the following grounds: -

• The show cause notice issued on 24.09.2014, is an outcome of audit of their records on 22.02.2012. It demands service tax for the period 2009-10 and 2010-11 (upto June 2010) and thus, it is beyond the normal period of limitation. It has been issued on the basis of balance sheet figures of these two years and their ledger accounts. There is no suppression of facts as the documents on the basis of which demand has been raised were already in public domain and therefore, demand for extended period is not sustainable.

• They started the business in 2009 and obtained service tax registration on 21.01.2010 under Port services and other services. They are also engaged in providing ship chandelling services to various ships calling at ports of Bcdi, Sikka, Vadinar, Okha, Pipavav and Mundra Port. This income has been booked under the category of “Income from fresh water sales” and therefore, sale of water cannot be treated as provision of service for charging the service tax • They raised debit notes to various parties/ owners who reimbursed the actual expenses incurred by them. The amount taken in the show cause notice is the value of water sold and not the service charge for supply of water. The sale of water is unconditionally exempted from VAT as per Sr. No.53 of Schedule 1 of Gujarat VAT Act, 2005.

• In their Debit notes, they have given quantity and price per M.T. sold to their consignees. This value includes transportation charges of tankers/ barges, pumping charges and profit margin only. They are not charging any separate service cha