2019 (12) TMI 797 - AT - Service Tax

Toll Fee Collection Services Deemed Taxable Under Business Auxiliary Services; No Exemption for Governmental Nature Claimed.

The Tribunal dismissed the appeal, determining that the appellant's services in toll fee collection are taxable under Business Auxiliary Services (BAS). ... Business Auxiliary Service - collection of toll fee in respect of National Highway Authority of India - HELD THAT:- In the instant case is squarely covered by the decision of this Tribunal in the case of Larson & Toubro Ltd. [2018 (11) TMI 924 - CESTAT AHMEDABAD] where it was held that Every user is a customer of AMTRL and the appellants are providing services to the customers (the users) on behalf of AMTRL and thus the activity would also be covered under clause (iii) of the definition of BAS. Since it is found that the nature of services provided is practically similar to the nature of services involved in the case of Larson & Toubro Ltd. - appeal dismissed. Issues Involved:1. Whether the services rendered by the appellant in respect of collection of toll fees for the National Highway Authority of India are liable to tax under the head of Business Auxiliary Services (BAS).2. Whether the compensation received by the appellant for toll collection services is taxable.3. Whether the appellant can claim an exemption based on the nature of the toll collection being a governmental function.4. Whether the appellant can benefit from the limitation period for tax assessment.Detailed Analysis:Issue 1: Taxability under Business Auxiliary Services (BAS)The primary issue in this case is whether the services rendered by the appellant, specifically the collection of toll fees, fall under the category of Business Auxiliary Services (BAS). The Tribunal referenced the definition of BAS, which includes services such as billing, collection, or recovery of cheques, accounts, and remittance. The Tribunal found that the appellant's activities, which include the collection of toll fees, maintaining records, and ensuring the security of the collected toll, align with the definition of BAS. Therefore, the services provided by the appellant are liable to tax under BAS.Issue 2: Compensation for Toll CollectionThe Tribunal clarified that while the toll collected is a tax, the compensation received by the appellant for the service of collecting the toll is not a tax. The compensation is for the service provided by the appellant to the principal (AMTRL) and is therefore subject to service tax. The Tribunal emphasized that there is no exemption for services provided in respect of the collection of tax.Issue 3: Exemption Based on Governmental FunctionThe appellant argued that the provision of good roads is a governmental responsibility and hence should not be treated as a taxable service. The Tribunal rejected this argument, stating that the construction, operation, and maintenance of roads were undertaken on a commercial basis by a private entity (IL&FS) through a corporate entity promoted by the Government of Gujarat. The toll collected is used for recovering investment and operating costs on a Build Own Operate Transfer (BOOT) basis. Hence, the service provided by the appellant is a commercial activity and not exempt from service tax.Issue 4: Limitation Period for Tax AssessmentThe appellant sought the benefit of the limitation period, arguing that their activities should not be taxable. The Tribunal found that the definition of BAS was clear, and the appellant's activities fell within this definition. Therefore, the appellant could not claim a bona fide belief for exemption, and the benefit of the limitation period was not applicable.Conclusion:The Tribunal dismissed the appeal, holding that the services rendered by the appellant in collecting toll fees are taxable under BAS. The compensation received for these services is subject to service tax, and the appellant cannot claim an exemption based on the governmental nature of the toll collection. Additionally, the appellant is not entitled to the benefit of the limitation period for tax assessment.Pronouncement:The judgment was pronounced in the open court on 18/12/2019.