Tribunal rules in favor of APMC in service tax case

The Tribunal ruled in favor of the Agricultural Produce Marketing Committee (APMC) in a case concerning the liability of service tax on market fee and rent received from traders. It held that the market fee collected by APMC did not fall under 'Business Support Service' but was exempt under 'Business Auxiliary Service'. The Tribunal also found that the rent received for renting shops was not liable to service tax under 'Renting of Immovable Property' and no penalty was imposed as the appellant had paid the service tax with interest within the specified time. The appeal was allowed, and the stay application was disposed of accordingly.

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Issues:
1. Liability of service tax on market fee collected by Agricultural Produce Marketing Committee (APMC) under the category of 'Business Support Service'.
2. Liability of service tax on rent received by APMC from traders for renting shops under the category of 'Renting of Immovable Property'.

Analysis:

Issue 1: Liability of service tax on market fee collected by APMC under the category of 'Business Support Service'
The appellant, APMC, Nagpur, constructed infrastructural facilities for marketing agricultural produce and collected a market fee under Section 73 of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963. The department contended that the market fee collected is liable to service tax under 'Business Support Service'. However, the appellant argued that Circular No. 157/8/2012 clarified that services provided by APMC fall under Business Auxiliary Services (BAS) and are exempt from service tax under Notification No. 14/2004-ST. The Circular highlighted that APMCs provide basic facilities for the benefit of all users and are not rendering 'business support service' to licensees. The Tribunal concurred with this interpretation and held that the demand under 'Business Support Service' was not sustainable in law.

Issue 2: Liability of service tax on rent received by APMC for renting shops under the category of 'Renting of Immovable Property'
The appellant received rent from traders who hired shops in the market area. The department asserted that this rent is liable to service tax under 'Renting of Immovable Property' category. The appellant admitted the liability and discharged the service tax with interest within the stipulated time under Section 80 of the Finance Act, 2012. The Tribunal acknowledged the compliance and held that no penalty was imposable on the appellant for the delayed payment of service tax in respect of 'Renting of Immovable Property Service'. Consequently, the demand under this category was set aside, and the appeal was allowed.

In conclusion, the Tribunal allowed the appeal, stating that the appellant was not liable to pay service tax on the market fee collected under 'Business Support Service' and was exempt under 'Business Auxiliary Service'. Additionally, the appellant had fulfilled the service tax liability with interest within the prescribed time for 'Renting of Immovable Property Service', leading to the setting aside of any penalty. The stay application was also disposed of accordingly.

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