Taxability of market committee rentals upheld where the activity was discretionary, not a mandatory sovereign function.

Renting, leasing or allotment of shops, land, platforms or space by a statutory market committee was treated as taxable service for the pre-01.07.2012 period because the activity was discretionary and not a mandatory sovereign function, and the charges collected did not have the character of a compulsory statutory fee paid into the Government treasury. A prior exemption circular did not cover the activity, and the later inclusion of similar services in the negative list supported the view that no earlier exemption applied. A pre-GST notice and the adjudication that followed GST were held to remain valid under the repeal-and-savings provision, so the post-GST order was not without jurisdiction. The limitation objection also failed, as the demand had already been confined to the normal period.

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Issues: (i) whether the activity of allotment or renting of shops, land, platform or space by the Agricultural Produce Market Committee was a taxable service prior to 01.07.2012; (ii) whether the adjudicating authority lacked jurisdiction after the GST regime on account of the notice having been issued earlier under the pre-GST law; and (iii) whether the demand was barred by limitation.

Issue (i): whether the activity of allotment or renting of shops, land, platform or space by the Agricultural Produce Market Committee was a taxable service prior to 01.07.2012.

Analysis: The exemption available to sovereign or public authorities applies only where the activity is a mandatory statutory function and the levy collected has the character of a compulsory statutory fee deposited into the Government treasury. The activity of renting, leasing or allotment of shops, land, platform or space under the relevant market law was held to be discretionary and not a mandatory statutory duty. The fee collected was credited to the Market Committee Fund and did not cease to remain the committee's fund merely because of its deposit procedure. The prior exemption circular did not cover such activity, and the later placement of similar activity in the negative list also supported the conclusion that it was not exempt earlier.

Conclusion: The activity was taxable and the challenge on merits failed, against the assessee.

Issue (ii): whether the adjudicating authority lacked jurisdiction after the GST regime on account of the notice having been issued earlier under the pre-GST law.

Analysis: The notice was issued before GST, while the order was passed after GST. The repeal-and-savings provision preserved the pending rights, liabilities and proceedings under the earlier law. The post-GST adjudication was therefore treated as a continuation of the pre-existing proceeding, and the objection that the authority acted without jurisdiction was rejected.

Conclusion: The jurisdictional challenge failed, against the assessee.

Issue (iii): whether the demand was barred by limitation.

Analysis: The appellate authority had already restricted the demand to the normal period, and the limitation objection did not survive on the facts of the case.

Conclusion: The limitation plea was rejected, against the assessee.

Final Conclusion: The demand of service tax was sustained and the appeal was dismissed.

Ratio Decidendi: An activity by a statutory market committee is taxable where it is discretionary rather than a mandatory sovereign function, and a proceeding validly initiated under the pre-GST law can continue after GST by virtue of the savings clause.

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