2023 (8) TMI 252 - AT - Service Tax

Tribunal ruling: Service Tax on rental income upheld, some services taxable. Extended limitation period valid.

M/s. Tamil Nadu Housing Board Versus Commissioner of Central Excise, Chennai And M/s. Tamil Nadu Housing Board Versus Commissioner of Service Tax, Chennai

M/s. Tamil Nadu Housing Board Versus Commissioner of Central Excise, Chennai And M/s. Tamil Nadu Housing Board Versus Commissioner of Service Tax, Chennai ... Issues Involved:1. Whether the appellant is a 'State' discharging/performing sovereign duty and hence, not amenable to Service TaxRs.2. Whether the service of renting of immovable property by the appellant is correctly taxedRs.3. Whether the demand of Service Tax under Management, Maintenance, or Repair (MMR) service is correctRs.4. Whether the demand of Service Tax under Business Auxiliary Service (BAS) is sustainableRs.5. Whether the demand of Service Tax under Technical Inspection and Certification (TIC) service is justifiedRs.6. Whether the extended period of limitation was rightly invokedRs.Summary:1. Whether the appellant is a 'State' discharging/performing sovereign duty and hence, not amenable to Service TaxRs.The Tribunal held that the definition of 'State' under Article 12 of the Constitution is limited to Part III of the Constitution and does not apply to other statutes, including the Finance Act. The appellant's contention that it performs sovereign functions was rejected, citing the Supreme Court's decision in Agricultural Produce Market Committee v. Shri Ashok Harikuni, which clarified that not all governmental functions are sovereign. Thus, the appellant is subject to Service Tax.2. Whether the service of renting of immovable property by the appellant is correctly taxedRs.The Tribunal upheld the lower authority's decision that the rental income received by the appellant is taxable under the service of 'renting of immovable property' as per Section 65(105)(zzzz) of the Finance Act, 1994. The reliance on the earlier Delhi High Court decision in Home Solution Retail India Ltd. was dismissed, as it was overruled by a subsequent 3-Judge Bench decision.3. Whether the demand of Service Tax under Management, Maintenance, or Repair (MMR) service is correctRs.The Tribunal remitted the issue back to the adjudicating authority for fresh consideration, allowing the appellant to submit supporting documents. It noted that the appellant had not provided sufficient evidence to prove that the charges collected were mere reimbursements for water charges.4. Whether the demand of Service Tax under Business Auxiliary Service (BAS) is sustainableRs.The Tribunal set aside the demand under BAS, noting that the Revenue failed to specify which limb of the BAS definition applied to the appellant's activities. The adjudicating authority did not adequately establish that the services provided by the appellant fell under BAS.5. Whether the demand of Service Tax under Technical Inspection and Certification (TIC) service is justifiedRs.The Tribunal upheld the demand under TIC service, finding that the appellant collected service charges for quality control inspection testing fees and did not provide a valid explanation for why these charges were deducted from contractor payments.6. Whether the extended period of limitation was rightly invokedRs.The Tribunal held that the extended period of limitation was rightly invoked, as the appellant had collected Service Tax but failed to remit it to the government, indicating suppression of facts and intent to evade tax.Conclusion:- The appeals on the issue of renting of immovable property and TIC service were dismissed.- The appeal on the issue of MMR service was partly allowed by way of remand.- The appeal on the issue of BAS was allowed.- The extended period of limitation was upheld against the appellant.