Stevedore service

Taxpayer contended that even if it was providing services of stevedores sales tax should not be chargeable on it with effect from 1st July 2008 due to change in the definition of supply given at S.2(33) of the Sales Tax Act, 1990, where from the phrase "other disposition of goods" had been omitted vide Finance Act, 2008; that due to such change the arrangement between a vendor and a toll manufacturer could not be covered under the definition of "supply" but rather bailment of goods, which was beyond the charge of Sales Tax under the Sales Tax Act, 1990; that as per S.3(3) of the Sindh Sales Tax Ordinance, 2000, the Sales Tax Act, 1990, and Rules and notification made thereunder applied mutatis mutandis to Sindh Sales Tax Ordinance, 2000; that toll manufacturing was no longer covered under the Sales Tax Act, 1990; and the same could not be made applicable in respect of stevedores services

Revenue authorities contended that services chargeable to tax were being performed by the taxpayer; that concept of toll manufacturing could not be stretchered and made applicable; and that taxpayer was rendering stevedore services, which was chargeable to sales tax, regardless of taxpayers arrangement with the Port authority

Validity

Taxpayer was rendering chargeable services and was liable to pay sales tax on the stevedore services

Express charge of tax on a person created by express provision of law must be discharged and stretching a concept which was associated with manufacturing of goods to rendering of services did not carry legal force to override the express provision of law

Toll manufacturing was an arrangement whereby one firm with specialized equipment processed raw materials or semi-finished goods for a second firm

No relation of toll manufacturing or the change in the definition of "supply" was found in the present case, and even otherwise, liability to pay sales tax on stevedore services was on taxpayer and not on the Port authority for the reason that the services were being rendered by the taxpayer and their private agreement could not override the provisions of statutory law.

Taxpayer contended that he was mere investor who had installed the machinery under an agreement with the Port authority and ships got connected to the pipe lines themselves and downpoured the oil into the pipes without involving any stevedoring

Validity

Argument of the taxpayer beged the question as to who owned the machinery and pipelines involved in the entire system whereby the bulk cargo was unloaded from the ships

Entire structure including machinery and pipelines was erected and owned by the taxpayer with the purpose of unloading bulk oil from ships

Nature of services performed through machines and pipelines was stevedoring services, which squarely fell within the ambit of stevedoring services chargeable to sales tax.

Revenue authorities contended that amount received by the taxpayer whether on the basis of services rendered or on the basis of fixed amount represented the value of supply; and that chargeability of sales tax was fully lawful

Validity

For chargeability of sales tax what needed to be determined was "Nature of Services" and not "Mode of payment"

Services being rendered by the taxpayer were stevedoring in nature and same chargeable to sales tax

Entire amount, whether on the basis of activity or on the basis of fixed throughput charges, was chargeable to Federal Excise Duty for the reason that charging section of the Sales Tax Ordinance, 2000, read with Sales Tax Act, 1990, did not make basis of payment as a precondition for chargeability of the tax

Order of First Appellate Authority was upheld by the Appellate Tribunal on the issue.

Services of unloading bulk cargo oil from ships fell within the ambit of stevedore services making the taxpayer liable to charge of sales tax

Since taxpayer was handling stevedore services, their argument that they were terminal operator and not stevedore did not carry any weight for the reason that terminal operators can and do render services of stevedore.