Concessionaire status defeats service tax on toll collection where assignment and official recognition show the SPV was not acting as an agent.

Assignment of project rights to the special purpose vehicle, together with later official recognition by the National Highways Authority of India, established that the vehicle had stepped into the shoes of the original concessionaire. On that basis, it was not acting merely as an agent, and toll collection could not be treated as agency service under Business Auxiliary Service. The service tax demand, along with interest and penalties, therefore could not survive, and the impugned orders were set aside.

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Issues: Whether the assessee collected toll charges as a concessionaire or as an agent of the original concessionaire, and consequently whether the toll collection was liable to service tax under Business Auxiliary Service.

Analysis: The agreements showed that the project rights were assigned to the special purpose vehicle, which stepped into the shoes of the original concessionaire under the assignment arrangement. The later notification and the clarification issued by the National Highways Authority of India expressly recognised the assessee as the concessionaire. These materials were consistent with the original contractual framework and negatived the Revenue's premise that the assessee was only acting as an agent. Once the assessee was found to be the concessionaire, the foundation for treating toll collection as taxable agency service failed.

Conclusion: The assessee collected toll in the capacity of concessionaire and not as an agent, and the demand of service tax, interest and penalties could not survive.

Final Conclusion: The impugned orders were set aside and the assessee's appeals were allowed, with the Revenue's appeal dismissed.

Ratio Decidendi: Where an assignment and subsequent official recognition establish that the special purpose vehicle has become the concessionaire, toll collection by it is not service rendered as an agent for Business Auxiliary Service.

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