Appellant Exempt from Service Tax on Alcohol Fees

The Tribunal ruled in favor of the appellant, stating that the fees paid to the State Government during the manufacture and trading of alcoholic beverages did not constitute provision of any service, thereby exempting the appellant from service tax liability. The impugned order was modified, and the appeal was allowed with consequential relief.

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Issues:
Whether the appellant is liable to pay service tax on reverse charge basis on various fees paid to the State Excise Department or Government agencies during their business of manufacture, import, and sale of alcoholic beverages for human consumptionRs.

Analysis:

Issue 1: Liability of service tax on various fees
The appellant argued that fees like permit fee, import/export pass fee, excise escort charges, and supervision charges paid to the State Government are not for any service but for parting with its exclusive privilege, thus not subject to service tax. Citing relevant judgments and the retrospective amendment in the Finance Act, 2019, the appellant contended that service tax is not leviable on license fee paid to the State Excise Department. The Tribunal agreed, holding that these fees are statutory levies and not for any service, thus not liable for service tax. The Tribunal referred to previous judgments and legislative provisions to support its decision.

Issue 2: Interpretation of fees paid to State Government
The Tribunal differentiated between license fee and other fees paid by the appellant to the State Government, emphasizing that these fees do not represent consideration for any service provided. The Tribunal highlighted the exclusive privilege of the State in regulating liquor activities and the legislative powers granted to the State regarding intoxicating liquors. The Tribunal also discussed the retrospective amendment in the Finance Act, 2019, which clarified that service tax is not applicable on fees paid to the State Government for liquor licenses during a specific period. The Tribunal upheld the demand for service tax on Storage License fee for CO2 but set aside demands on other fees like Export Pass fee, Import Pass fee, Permit fee, Excise Staff Salary, and overtime charges.

Issue 3: Application of GST Council recommendations
The Tribunal noted the recommendations of the GST Council regarding the non-leviability of GST on license and application fees for alcoholic liquor for human consumption, which also applied to the pre-GST era. By following the judgments and legislative provisions, the Tribunal concluded that the appellant was not liable to pay service tax on certain fees paid to the State Government. The Tribunal allowed the appeal partly, modifying the impugned order and providing consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, stating that the fees paid to the State Government during the manufacture and trading of alcoholic beverages did not constitute provision of any service, thereby exempting the appellant from service tax liability. The impugned order was modified, and the appeal was allowed with consequential relief.

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