Business Auxiliary Service classification fails for NHAI toll collection; service tax demand and penalties set aside.

Toll fee collection under a contract with NHAI was held not to fall within Business Auxiliary Service because the activity was not incidental or auxiliary to any business activity of NHAI. The Tribunal followed its settled view in the appellant's own case and similar matters that NHAI, in this context, was not engaged in a business activity for which toll operations could be treated as an auxiliary service. The service tax demand was therefore unsustainable, and the impugned order was set aside, with relief granted from the related tax, interest and penalties.

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Issues: Whether toll collection undertaken under the contract with the National Highways Authority of India was taxable as Business Auxiliary Service.

Analysis: The activity in question formed part of a short-term improvement and routine maintenance contract under which the appellant undertook multiple works, including road maintenance, road property management, incident management, engineering improvements and toll operations. The consistent view of the Tribunal in the appellant's own case and in other similar matters was that toll fee collection for NHAI does not amount to a service rendered as an incidental or auxiliary activity on behalf of a business concern, because NHAI is not engaged in a business activity in that context. Following that settled line of decisions, the toll operations could not be brought within the scope of Business Auxiliary Service.

Conclusion: The demand of service tax under Business Auxiliary Service was not sustainable and the impugned order was set aside.

Final Conclusion: The appeal succeeded and the appellant obtained relief from the service tax demand, interest and penalties arising from the classification of toll collection as taxable service.

Ratio Decidendi: Collection of toll fee under a contract with NHAI does not constitute Business Auxiliary Service when the activity is not incidental or auxiliary to any business activity of NHAI.

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