Market fee services of APMC are treated as exempt Business Auxiliary Service; timely tax payment bars penalty.

Services provided by an Agricultural Produce Market Committee out of market fee are stated not to constitute Business Support Service, because they are rendered in discharge of statutory functions for the benefit of users generally; they are instead treated as Business Auxiliary Service and covered by the stated exemption notification. On that basis, market fee is not consideration for Business Support Service. The text also states that where service tax on Renting of Immovable Property Service, together with interest, is paid within the prescribed six-month period, penalty under the specified provisions is barred by the statutory relief provision. The appeal is described as succeeding, with the demand and penalty vacated.

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Issues: (i) Whether the market fee collected by the Agricultural Produce Market Committee was liable to service tax under Business Support Service or was classifiable as Business Auxiliary Service and exempt under the applicable notification. (ii) Whether penalty was imposable on the appellant for delayed payment of service tax on Renting of Immovable Property Service when tax and interest had been paid within the statutory period.

Issue (i): Whether the market fee collected by the Agricultural Produce Market Committee was liable to service tax under Business Support Service or was classifiable as Business Auxiliary Service and exempt under the applicable notification.

Analysis: The Board circular clarified that services provided by Agricultural Produce Market Committees out of market fee do not fall under Business Support Service, since the facilities are provided in discharge of statutory functions for the benefit of users generally and are not outsourced services rendered solely in the business interest of licensees. The circular further stated that such services are classifiable as Business Auxiliary Service and are covered by the exemption under Notification No. 14/2004-ST. On that basis, the market fee collected by the appellant was not consideration for Business Support Service.

Conclusion: The demand of service tax on the market fee under Business Support Service was not sustainable and was set aside in favour of the assessee.

Issue (ii): Whether penalty was imposable on the appellant for delayed payment of service tax on Renting of Immovable Property Service when tax and interest had been paid within the statutory period.

Analysis: The appellant paid the service tax along with interest within six months from the enactment of the Finance Act, 2012. The statutory relief under Section 80 of the Finance Act, 2012 barred imposition of penalty under Sections 76, 77 and 78 where tax with interest was paid in full within the prescribed period. Since the liability on renting service stood discharged in time, the penalty could not survive.

Conclusion: Penalty on the renting service was not imposable and was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded and the tax demand on market fee and the related penalty on renting service were both vacated, leaving no surviving adverse order against the appellant.

Ratio Decidendi: Statutory market-fee based services rendered by an APMC are not Business Support Service but are classifiable as Business Auxiliary Service and exempt where the governing circular so provides, and penalty cannot be imposed where section 80 protection applies upon timely payment of tax with interest.

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