2013 (11) TMI 602 - AT - Service Tax

Tribunal rules in favor of APMC in Service Tax case

The Tribunal ruled in favor of the Agricultural Produce Market Committee (APMC) in a case concerning the liability to pay Service Tax. The Tribunal held ... Business Support Service (BSS) – appellant constructed infrastructural facilities for marketing of agricultural produce and given to the farmers for marketing their produce - department contented that market fee collected is liable to service tax under the category of ‘Business Support Service' - rent received is liable under the category of 'Renting of Immovable Property' – Held that:- The appellant is not liable to pay service tax on the market fee collected by them - Following the decision in earlier cae [2013 (7) TMI 207 - CESTAT MUMBAI], the services rendered is covered under Business Auxiliary Services and are exempted from service tax under Notification NO. 14/2004-ST with reference to the constitution and functions, the services provided were out of the 'market fee' collected from the licensees and not in the nature of ‘outsourced services’– which did not appropriately fall under the category of Business Support Services - Development and maintenance of agricultural market infrastructure, is for the benefit of all users, rather than an activity solely in the interest of licensees. Issues:1. Liability of Agricultural Produce Market Committee (APMC) to pay Service Tax on marketing fee collected.2. Liability of APMC to pay Service Tax on Renting of Immovable Property.Analysis:Issue 1: Liability of APMC to pay Service Tax on marketing fee collected:The appeal and stay petition were directed against Order-in-Original No. 07/ST/2013/C dated 21.02.2013, where a demand of Rs. 90,32,114/- was confirmed against the appellant APMC for Service Tax on market fee collected for the period 2011-12. The appellant contended that a previous Tribunal decision in their favor established that market fee collected by APMC is not liable for Service Tax. The Additional Commissioner for the Revenue acknowledged the similarity of facts with the previous case. The Tribunal, considering the narrow compass of the issue, waived the requirement of pre-deposit and proceeded with the appeal. Referring to the previous decision, the Tribunal held that the demand of Service Tax of Rs. 90,32,114/- was not sustainable in law. Consequently, the interest and penalties imposed were also deemed unsustainable.Issue 2: Liability of APMC to pay Service Tax on Renting of Immovable Property:Regarding the demand of Rs. 9,213/- under the category of Renting of Immovable Property, the appellant had already discharged the Service Tax liability along with interest. The appellant did not contest this liability. The Tribunal found that since the appellant had fulfilled the Service Tax liability promptly, the imposition of penalty for late payment was not warranted. Therefore, the Tribunal concluded that the demand of Rs. 9,213/- was not subject to penalty. Consequently, the appeal was allowed, and the stay petition was disposed of.In conclusion, the Tribunal ruled in favor of the appellant, APMC, holding that the market fee collected by APMC was not liable for Service Tax. The demand for Service Tax and penalties were set aside based on a previous Tribunal decision. The Tribunal also determined that the appellant had fulfilled the liability for Renting of Immovable Property, thereby negating the need for penalties.