ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 01.09.2025
CESTAT Mumbai- JNPT was not liable to pay service tax on royalty charges collected under BOT agreementsβ
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
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In a significant judgment, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, has ruled in favor of Jawaharlal Nehru Port Trust (JNPT) in a long-standing dispute over the applicability of service tax on royalty charges collected under Build-Operate-Transfer (BOT) agreements. This decision, delivered on August 14, 2025, sets a precedent for similar cases in the port sector and reinforces the legal position that royalty charges under such agreements do not constitute taxable services.
Background of the Case
The appellants, Jawaharlal Nehru Port Trust (JNPT), had entered into BOT agreements with private entities such as Nhava Sheva International Container Terminal (NSICT) and Bharat Petroleum Corporation Ltd. (BPCL) for the development and operation of container and liquid cargo terminals. β Under these agreements, the private operators paid royalty charges to JNPT based on metrics like TEU (Twenty-foot Equivalent Unit) or Metric Tonne of cargo handled. The jurisdictional service tax authorities contended that these royalty charges fell under the category of “Port Services” and were subject to service tax. β Consequently, 16 show-cause notices were issued for the period between July 2001 and March 2010, demanding service tax and penalties.
Source: CESTAT Mumbai
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