JUDGMENT
Ashim Kumar Banerjee, J.
1. This appeal arises out of a question as to whether the Port Management Board, being a service provider under the Finance Act, 1993 (as amended in 2003), is entitled to recover service tax from the members of the writ petitioner appellant for the service rendered to them during the period from July 01, 2003 to May 20, 2004 retrospectively.
2. The writ petitioner is an association of business people/organization working for gain within the islands. For the business purpose, they were provided services by the Port Management Board during the relevant period for which service tax was admittedly payable by them. The port authority, however, did not have registration at that point of time under the Finance Act. They got themselves registered by the competent authority on May 21, 2004.
3. After getting the registration, the port authority issued notices to various organization and/or business people who were rendered services by the port authorities during the period from July 01, 2003 to May 20, 2004 including interest thereon. Such demand was challenged by the writ petitioner on behalf of its members in a writ petition being W.P.No. 219 of 2004. The same was heard and disposed of by the learned Single Judge of this Court sitting in Circuit Bench at Port Blair by His Lordship’s judgment and order dated August 16, 2005.
4. It was contended on behalf of the petitioner before His Lordship that, although admittedly service tax was payable for the said period since the port authority did not have registration for the said period, they were not entitled to claim such tax retrospectively and that too with interest. It was further contended that it was the Central Excise Authority who was entitled to demand arrears and not the port authority.
5. Both the contentions were rejected by His Lordship. According to His Lordship, under the Finance act, the service provider, being the port authority herein, was obliged to collect service tax from the service taker and to deposit the same with the competent authority under the Finance Act. His Lordship found that there was no illegality in permitting the port authority in demanding such tax retrospectively. His Lordship, however, upheld the contention of the petitioner on account of interest. His Lordship observed that since there was no fault on the part of the concerned service takers, they could not be forced to pay interest on arrears amount.
6. Being aggrieved by the said judgment and order dated August 16, 2005, the present appeal was filed by the writ petitioner.
7. Mr. Hemraj Bahadur, learned advocate appearing for the appellant, in support of the appeal, in addition to the point already urged before His Lordship, contended that in case petitioner was compelled to pay arrears, there would be business loss as they would not be in a position to collect service tax in turn from their ultimate consumers as they did not contemporarily charge them to the said extent.
8. In support of his contention, Mr. Bahadur relied on the Apex Court decision in the case of Laghu Udyog Bharati and Anr. v. Union of India and Ors. . The Apex court interpreted Sections 65, 68, 70 and 71 of the said Act and rules framed thereunder. The Apex Court, in paragraph 12, observed as follows:
These sections clearly show that the return which has to be filed pertains to the payment which are received by the person tendering the service in respect of the value of the taxable services. Surely, this is a type of information which cannot, under any circumstances, be supplied by the customer. Moreover the operative part of Sub-section (1) of Section 70 clearly stipulates that it is a person responsible for collecting the service tax who is to furnish the return. By rules which are framed, the person who is receiving the services cannot be made responsible for filling the return and paying the tax. Such a position is certainly not contemplated by the Act.
9. By the said observations, the Apex Court held that the service provider is primarily responsible for submission of return and the service taker is, however, not responsible for the same. We are unable to find any support from the said judgment to accept the contentions of Mr. Bahadur.
10. Opposing the appeal, Mrs. Anjill Nag, learned advocate appearing for the port authority, contended that under the Finance Act, 1993, as amended in 2003, it was obligatory on the part of the service taker to pay service tax, at the same time, it was obligatory on the part of the service provider to collect service tax from the service taker and deposit the same with the competent authority. No time was prescribed under the said Act for collection of the said tax. Similarly, there was no provision under the law empowering the service taker to collect the service tax in turn from their ultimate consumers unlike sales tax as provided under the Sale of Goods Act. In support of her contention, she relied on the Apex Court decision reported in 2004 (5) SGC 632.
11. In the case of T.N. Kalyana Mandabam Association [ut-supra], the Apex Court, while considering the claim of service tax, observed that the same has no nexus with sale or purchase of goods. The Apex Court also observed that the meaning of service provided assumes predominance which is definite indicator of the supremacy of the service aspect. The Apex Court rejected the plea that the said act is ultra vires to the Constitution.
12. Initially “Port” within the meaning of Major Port Trusts Act was brought within the ambit of service tax. In 2003 “Other Port” was also brought in by way of amendment. Andaman Ports thus came within the ambit of service tax. We need not to dilute on this any further as the petitioner also admitted that they were liable to pay service tax for the service rendered by the port authority.
13. Only question remains to be adjudicated as to whether the arrears of tax could be recovered by the port authority or not. Reliance was placed, by Mr. Bahadur, on Section 73 wherein the competent authority under the Act has been empowered to collect arrears of service tax levied or short-levied or short-paid or erroneously refunded by serving notice on the person chargeable with the service tax. The said section has also imposed penalty for non-compliance. Relying on the said section, Mr. Bahadur tried to contend that, since the tax was not paid by the petitioner, the Central Excise Authority was only entitled to demand the same and not the port authority. This aspect was gone into by the learned Single Judge and His Lordsip found no merit in such contention. Under Section 68, every person providing taxable service to any person shall pay service tax at the rates specified. Under Section 69, such person must get themselves registered with the competent authority. Under Section 70, such service provider would himself assess the tax due on the services provided by him and submit a return therefor. On a complete reading of the said Act and rules framed thereunder, it appears that it is a service provider who is primarily responsible for payment of the service tax to the authority. At the same time, he is really a collecting agent for the competent authority. He is to collect the service tax from the consumer and pay the same to the authority after being registered under Section 69. He is also to submit return as per Section 70.
14. In the Instant case, initially the particular port was kept outside the purview of the said Act. By way of amendment, this particular port was brought within the scope and ambit of the said Act. However, there was some delay initially on the part of the port authority to get themselves registered under the said Act. As such they could not initially collect the tax from the service taker.
15. Hence, we do not find any Illegality in collecting this arrear tax. There is no time limit prescribed either for such collection or deposit, what has been provided in the Act, is a penal measure for non-compliance therefor. As soon as the port authority got themselves registered with the competent authority under the Act, they demanded arrears with effect from the date when the particular port came within the ambit of the said Act.
16. We do not find any scope of disagreement with His Lordship. Similarly we do not have any scope for interference in this appeal.
17. The appeal is, thus dismissed without, however, any order as to costs.
P.N. Sinha, J.
18. I agree.