2023 (9) TMI 75 - AT - Service Tax

SBPDCL qualifies as 'Government Authority' for exemption under Notification No. 25/2012-ST. Extended limitation not applicable.

The Tribunal held that SBPDCL qualifies as a 'Government Authority' under Notification No. 25/2012-ST and the works carried out by the Appellant for ... Governmental authority - Functions entrusted to a Municipality under Article 243W - Exemption under Notification No. 25/2012-ST - Extended period of limitation under proviso to section 78Governmental authority - Notification No. 2/2014-S.T. (substitution to clause 2(s)) - SBPDCL falls within the definition of 'Government Authority' as per clause 2(s) of Notification No.25/2012-ST as substituted by Notification No.2/2014-S.T. w.e.f. 30-1-2014. - HELD THAT: - The Tribunal examined the company status and ownership of South Bihar Power Distribution Company Limited and the holding structure showing 100% shareholding by Bihar State Power (Holding) Company Limited which is wholly owned by the State Government. Applying the substituted clause 2(s), which treats an authority, board or body set up by a State Legislature or established by Government with 90% or more participation by way of equity or control as a 'Governmental authority' for the purpose of carrying out functions entrusted to municipalities under Article 243W, the Tribunal concluded that SBPDCL falls within the statutory definition. The conclusion follows from the corporate formation, vesting of distribution undertakings by the State and complete government ownership/control as recorded in the material before the Tribunal. [Paras 10, 12]SBPDCL is a 'Government Authority' within clause 2(s) of the Notification.Functions entrusted to a Municipality under Article 243W - Twelfth Schedule - planning for economic and social development - Exemption under Notification No. 25/2012-ST (entries 12A(a) and 25) - The works undertaken by the appellant for SBPDCL fall within the functions entrusted to a Municipality under Article 243W (Twelfth Schedule) and are therefore eligible for exemption under Notification No.25/2012-ST. - HELD THAT: - The Tribunal compared the scope of the appellant's work order - supply of materials and equipment, erection, testing and commissioning of electric lines and providing service connections to state tube wells under a special state plan (BRGF) - with the entries in the Twelfth Schedule to Article 243W. It held that the tube well energization and associated works qualify as 'planning for economic and social development', an entry in the Twelfth Schedule. Since Notification No.25/2012-ST exempts specified services rendered to Governmental authorities when they pertain to functions entrusted to municipalities, the Tribunal found the appellant's services to be covered by the exemption entries reproduced in the order. [Paras 17, 18]The works are functions entrusted to a Municipality under Article 243W and the appellant is eligible for the Notification exemption.Extended period of limitation under proviso to section 78 - Extended period of limitation cannot be invoked as there was no evidence of deliberate suppression, collusion or wilful misstatement by the appellant to evade payment of duty. - HELD THAT: - The Tribunal noted that invocation of the extended limitation period requires proof of deliberate default such as suppression or wilful mis-statement with intent to evade duty. The authorities below had applied the extended period on the basis that the appellant claimed exemption; however, the Tribunal found no material establishing intentional concealment or collusion. Mere non-payment or non-levy does not ipso facto amount to suppression or deliberate evasion. In absence of evidence of deliberate default, the extended period under the proviso could not be sustained. [Paras 19, 20]Demands are unsustainable on the ground of limitation; extended period is not invocable.Final Conclusion: The appeal is allowed. The Tribunal set aside the impugned order, holding that SBPDCL is a 'Government Authority', the works performed by the appellant fall within functions entrusted to a Municipality under Article 243W and are exempt under Notification No.25/2012-ST, and the demands are also unsustainable on limitation grounds; consequential interest and penalty do not arise. Issues Involved:1. Whether SBPDCL qualifies as a 'Government Authority' under Notification No. 25/2012-ST.2. Whether the works carried out by the Appellant for SBPDCL are functions entrusted to a Municipality under Article 243W of the Constitution of India.3. Applicability of the extended period of limitation.Summary:Issue 1: Whether SBPDCL qualifies as a 'Government Authority' under Notification No. 25/2012-ST.The Tribunal examined the definition of 'Government Authority' as per Clause 2(s) of Notification No. 25/2012-ST dated 20.06.2012, which was later substituted by Notification No. 2/2014-S.T. w.e.f. 30-1-2014. The definition includes any authority or body set up by an Act of Parliament or State Legislature or established by Government with 90% or more participation by way of equity or control. The Tribunal found that SBPDCL, being a subsidiary of Bihar State Power (Holding) Company Limited which is wholly owned by the Government of Bihar, falls within this definition. Judicial pronouncements such as *KRISHI CONSTRUCTIONS PVT. LTD. Versus COMMISSIONER OF C.T., HYDERABAD* and *RAJASTHAN STATE ROAD DEVELOPMENT CONSTRUCTION CORPORATION LTD. Versus COMMISSIONER OF CGST & C. EX., JODHPUR* supported this interpretation. Thus, SBPDCL is held to be a 'Government Authority'.Issue 2: Whether the works carried out by the Appellant for SBPDCL are functions entrusted to a Municipality under Article 243W of the Constitution of India.The Tribunal referred to Notification 25/2012-ST which exempts services provided to a Government authority if they are functions entrusted to a Municipality under Article 243W. The works carried out by the Appellant included supply of materials, erection, testing, and commissioning of electric lines under a special state plan. The Tribunal examined Article 243W and the Twelfth Schedule, which includes 'Planning for economic and social development.' The Tribunal concluded that the works undertaken by the Appellant fall under this category and are thus functions entrusted to a Municipality. Consequently, the Appellant is eligible for the exemption under Notification 25/2012-ST.Issue 3: Applicability of the extended period of limitation.The Tribunal observed that the extended period of limitation under proviso to section 78 of the Act can only be invoked in cases of fraud, collusion, or wilful misstatement or suppression of facts with intent to evade payment of tax. The Tribunal found no evidence of deliberate default or suppression by the Appellant. Therefore, the extended period of limitation was not applicable, and the demand confirmed in the impugned order was not sustainable on this ground as well.Conclusion:The Tribunal held that the Appellant provided services to a 'Government Authority' and carried out functions entrusted to a Municipality under Article 243W, making them eligible for exemption under Notification 25/2012-ST. The demand confirmed in the impugned order was set aside on merits and on the ground of limitation. The appeal filed by the Appellant was allowed.