Appellant Liable for Service Tax on Water Meter Rental Charges

The Tribunal held the appellant liable to pay service tax on rental charges collected on water meters, treating the service as 'Supply of Tangible Goods' service. Despite the appellant's argument of being a statutory body, the charges were deemed taxable as they met the statutory definition. The Tribunal emphasized that the charges were not a compulsory levy per relevant statute and required a deposit of &8377; 50 lakhs for the appeal to proceed, with a waiver of pre-deposit of the balance dues and a stay against recovery during the appeal period upon compliance.

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Issues:
1. Liability to pay service tax on rental charges/hiring charges collected on water meters.
2. Appellant's argument of being a statutory body and the nature of charges collected.
3. Interpretation of Board's Circular and its applicability.
4. Consideration of prima facie case and requirement of depositing amount during appeal.

Analysis:
1. The judgment revolves around the issue of the appellant's liability to pay service tax on the rental charges/hiring charges collected on water meters installed for supplying water. The impugned order held the appellant liable for service tax amounting to &8377; 2,76,48,398/- with interest for the period from May 2008 to February 2010, treating the service as 'Supply of Tangible Goods' service.

2. The appellant argued that it is a statutory body performing a statutory function, thus not liable to tax. The charges collected were considered as a statutory levy prescribed by the statute, supported by a Board's Circular. However, the respondent contended that the charges were hiring charges for the meter, not a statutory levy, and the Board's circular was inapplicable. The Tribunal found that the requirements of the statutory definition of supply of tangible goods were met, as possession and control of the meters remained with the Board.

3. The Tribunal analyzed the Board's Circular, emphasizing that the activity should be in public interest and undertaken as a mandatory and statutory function to be exempt from tax. While the Circular stated that fees collected should be in the nature of a compulsory levy per relevant statute, it was noted that the service became taxable only from May 2008. The Tribunal concluded that the appellant failed to establish a prima facie case on merits, requiring a deposit for the normal period of limitation.

4. Due to the lack of data on the actual amount attributable to the normal period and the absence of the show-cause notice, the Tribunal directed the appellant to deposit &8377; 50 lakhs within 6 weeks for the purpose of hearing the appeal. Compliance with the deposit would result in a waiver of pre-deposit of the balance dues and a stay against recovery during the appeal period.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision regarding the liability to pay service tax on rental charges collected on water meters.

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