2014 (11) TMI 311 - AT - Service Tax

Tribunal exempts statutory body under Maharashtra law from service tax for amenities.

MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION Versus CCE, NASIK

The tribunal ruled in favor of the appellant, a statutory body under the Maharashtra Industrial Development Act, in a case concerning demands for ... Management, Maintenance and Repair services - appellant is performing the statutory/sovereign function - appellant is an agent of Government of Maharashtra. - Held that:- Appellant are providing these services in accordance with MID Act 1961 and Rules framed there-under and the activity undertaken by them is mandatory and statutory functions therefore, the activity as per the said Circular are not liable to service tax. Section 97 of the Finance Act, 1994 and the Notification No. 24/2009 dated 27.7.2009 exempts the services of maintenance and repairs of roads. Therefore, the appellant are not require to pay service tax on their activity as discussed above. The appellant are executing their work which is statutory in nature. demand is for two periods - one from 1.10.2011 to 30.06.2012 and the second is from 01.7.2012 to 30.09.2012 when the negative list came into effect but the show-cause notice has been issued on the basis of definition of Management, Maintenance and Repair service has stood prior to 01.07.2012. Therefore, as post 01.07.2012 the provisions are not existing therefore, the demands for the period post 01.07.2012 are not maintainable. - Decided in favour of assessee. Issues:1. Whether the demands under Management, Maintenance, and Repair services against the appellant have been confirmed correctly.2. Whether the appellant, a statutory body under the Maharashtra Industrial Development Act, is liable to pay service tax on charges collected for providing amenities.3. Whether the appellant's activities fall under the category of Management, Maintenance, and Repair services as per the Finance Act, 1994.4. Whether the appellant is exempt from service tax under relevant provisions and notifications.Issue 1:The appellant filed appeals against confirmed demands for Management, Maintenance, and Repair services during 01.04.2005 to 30.09.2012. The appellant, Maharashtra Industrial Development Corporation, collects charges from plot owners for providing infrastructural facilities like roads, water, drainage, street lights, etc. The Revenue alleged that the service charges collected fall under the category of 'Management, Maintenance, or Repair Service.' Show-cause notices were issued, demands were confirmed, and penalties imposed. The appellant challenged these orders before the Commissioner (Appeals) and subsequently before the tribunal.Issue 2:The appellant argued that as a statutory corporation under the Maharashtra Industrial Development Act, it acts as an agent of the Government in performing its functions. The appellant collects compulsory levy/service charges for providing amenities like roads, street lights, plantation, etc., as part of its statutory functions. The appellant contended that it is not liable to pay service tax based on Supreme Court judgments and CBEC Circulars exempting activities performed by sovereign/public authorities. The appellant emphasized that the charges collected are not for maintenance/repair services but for the use of amenities.Issue 3:The Revenue contended that the appellant's services of maintenance of roads, street lights, plantation, etc., fall under Management, Maintenance, and Repair services as per the Finance Act, 1994. The Revenue argued that since the appellant is registered under the category of renting of immovable property and provides these services to plot owners, their activities are covered under the said category. The Revenue asserted that the appellant is not executing sovereign functions, and therefore, liable to pay service tax.Issue 4:The tribunal analyzed the provisions of the MID Act, 1961, and found that the appellant is discharging statutory functions as per the Act and Rules. Referring to CBEC Circulars and relevant notifications, the tribunal concluded that the appellant's activities are mandatory and statutory, exempt from service tax. The tribunal also noted that Section 97 of the Finance Act, 1994, and Notification No. 24/2009 exempt maintenance and repairs of roads. The tribunal held that the demands post 01.07.2012 were not maintainable due to changes in provisions. Consequently, the tribunal set aside the impugned orders, allowing the appeals with consequential relief.