2019 (8) TMI 1371 - AT - Service Tax

CESTAT ruling: Development authorities as Body Corporate under Companies Act eligible for tax benefits

The Appellate Tribunal CESTAT ALLAHABAD ruled in favor of the appellant, recognizing the development authorities as Body Corporate under the Companies Act ... Classification of services - construction services provided to M/s Bhopal Development Authority and M/s Greater Noida Development Authority - Body corporate or not - whether classifiable under Works Contract Services or not - denial of benefit of Notification No.30/2012-ST dated 20.06.2012 - HELD THAT:- The Appellate Authority is not disputing the fact that Bhopal Development Authority as also Greater Noida Development Authority are Body Corporate. However, he is further observing that they have not been established Body Corporate under Clause (7) of Section 2 of the Companies Act, which is requirement of the notification in question - We have seen the said Clause (7) of Section 2 of the Companies Act the said Section has inclusive definition which include the companies incorporated Out-side India but further excluded certain Body Corporates, which Central Government, may by the notification in the public Official Gazettes, specify in this behalf. The facts is as to whether the appellant has paid 50% of the duty or not, is required to be checked by the Original Adjudicating Authority to whom the matter is being remanded - appeal allowed by way of remand. Issues: Classification of services under Works Contract Services and eligibility for benefit under Notification No.30/2012-ST.In this case, the Appellate Tribunal CESTAT ALLAHABAD analyzed the issue of classification of services provided by the appellant to M/s Bhopal Development Authority and M/s Greater Noida Development Authority under Works Contract Services. The appellant was registered under Construction Services and discharging service tax liability accordingly. The Revenue contended that the services should be classified under Works Contract Services, leading to proceedings against the appellant for confirmation of differential duty. During adjudication, the appellant accepted the classification but claimed the benefit of Notification No.30/2012-ST dated 20.06.2012. This notification required the service provider to pay 50% of the service tax when providing services to Body Corporate, with the recipient paying the remaining 50%. The Lower Authority denied the benefit of the notification, stating that the development authorities in question could not be considered as Body Corporate. The Commissioner (Appeals) emphasized the need for conclusive evidence to establish the status of the authorities as Body Corporate under the Companies Act, 1956, for eligibility under the notification.The Appellate Tribunal acknowledged that the development authorities were indeed Body Corporate but emphasized the requirement for them to be established as such under Clause (7) of Section 2 of the Companies Act, as mandated by the notification. The Tribunal noted that the Companies Act provides an inclusive definition of Body Corporate, which includes companies incorporated outside India but excludes certain bodies specified by the Central Government through notification. Since the development authorities were not specifically excluded, the Tribunal found no reason to uphold the denial of the benefit under the notification. However, the Tribunal directed the Original Adjudicating Authority to verify whether the appellant had paid 50% of the duty as required. Ultimately, the appeals were disposed of based on the above analysis.This judgment clarifies the importance of establishing the status of entities as Body Corporate under the relevant legislation to determine eligibility for benefits under specific notifications. It highlights the need for conclusive evidence to support claims made by taxpayers regarding their entitlement to tax benefits, emphasizing the legal requirements that must be met for such claims to be considered valid.