TaxTMI 
TaxTMI 
2017 (5) TMI 1465
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....Department. ORDER Per: B. Ravichandran These are 65 appeals filed by Krishi Upaj Mandi Samiti located in different parts of State of Rajasthan. The issue involved is identical and hence, all these appeals are taken up together for disposal. 2. The brief facts of the case are that the appellant was established by the Rajasthan State Government under the provisions of The Rajasthan Agricultural Produce Markets Act, 1961. The Act is for establishment of regulated market for purchase and sale of agricultural produce and to protect the agriculturists from being exploited by the middle man and to enable them to secure fair return of their produce. The State Government constituted the various market committees, in notified market areas to carry out the functions as envisaged in the said Act and the Rajasthan Agricultural Produce Market Rules, 1961. The appellants regulate sale of agricultural produce in the notified markets. They charged "market fee" for issuing licence to traders, agents, factory/cold storage owners or other buyers of other agricultural produce. The appellants also let out land and shops to traders and collected allotment fee/lease amount for such land/shop. ....
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....D) of the Finance Act, 1994. (d) The appellants are a Government body and as such, no allegation of fraud, mis-statement with intention to evade service tax can be made against them. There is no malafide act on the part of the appellants. The dispute is relating to interpretation of statutory provisions to determine their service tax liability. Various circulars issued by the Board as well as decisions of the Tribunal and High Courts will show that the scope of tax liability under renting of immovable property has been a subject matter of serious dispute. Accordingly, there can be no ingredients for invoking demand for extended period and also for imposing penalties on the appellants. (e) Wherever applicable, the appellants should be granted benefit of threshold exemption available to the small scale service providers. 5. Ld. AR contested the grounds of appeal by the appellants. It is submitted that though the appellants are created as per the provisions of an Act of State of Rajasthan, all the activities carried out by them cannot automatically be put outside the scope of service tax liability. The statutory function carried out by the appellants and the fee, ....
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....lic authorities (i.e., an agency constituted/set up by Government) perform certain functions/duties, which are statutory in nature. These functions are performed in terms of specific responsibility assigned to them under the law in force. For examples, the Regional Reference Standards Laboratories (RRSL) undertake verification, approval and calibration of weighing and measuring instruments; the Regional Transport Officer (RTO) issues fitness certificate to the vehicles; the Directorate of Boilers inspects and issues certificate for boilers; or Explosive Department inspects and issues certificate for petroleum storage tank, LPG/CNG tank in terms of provisions of the relevant laws. Fee as prescribed is charged and the same is ultimately deposited into the Government Treasury. A doubt has arisen whether such activities provided by a sovereign/public authority required to be provided under a statute can be considered as „provision of service‟ for the purpose of levy of service tax. 2. The issue has been examined. The Board is of the view that the activities performed by the sovereign/public authorities under the provision of law are in the nature of statutory oblig....
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.... the rules made thereunder. In fact, in the written submissions, made by the ld. Counsel for the appellants in Appeal No.ST/50069 of 2017 and ST/51936/2016, it is specifically mentioned that the allotments of land and shops were made by the appellants in terms of the Immovable Property Allotment Rules, 2005 and the fees are received for such allotments. We have examined sample copies of allotment letters and agreements, entered into by the appellants with the traders. The appellants allotted shops/godown/platforms towards a monthly consideration called as allotment fee. The allottee shall pay three months advance of allotment fee, which shall be kept as a security by the Market Committee. The allottee shall pay the monthly allotment fee on or before 5th of every month. We have perused the allotment letter as well as agreements. The agreement clearly mentions that the allotment is made for a consideration of allotment fee/lease amount. The terms of the agreement/allotment letter clearly indicated the arrangement for renting of immovable property for a consideration. The fact that the allottee uses the shop/premises for commercial purpose is not in dispute. As such, we find the claim....
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....ing of agricultural produce; (vi) agricultural extension services; (vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce; 11. It is clear that the appellants, being an Agricultural Produce Marketing Committee, is excluded from the tax liability in terms of the above provisions. Services relating to agricultural produce by way of storage or warehousing are in the negative list. The scope of negative list has been examined by the Board in the Education Guide dated 20.06.2012. Para 4.4.9 of the said Guide states as below:- 4.4.9 Would leasing of vacant land with green house or a storage shed meant for agricultural produce be covered in the negative list? Yes. In terms of the specified services relating to agriculture "leasing‟ of vacant services land with or without structure incidental to its use‟ is covered in the negative list. Therefore, if vacant land has a structure like storage shed or a green house built on it, which is incidental to its use for agriculture then its lease would be covered under negative list entry. ....
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....e list. In the present case, we note that we are dealing with the shops and land given out on rent, which are in the primary market areas, where agricultural produce are brought for sale. The allotment stipulates that the shops/godown shall be used for business of notified commodities and licence is issued by the Market Committee. As such, the premises in the primary market areas are let out with reference to agricultural produce, their storage/warehousing, etc. During the course of arguments, the ld. Counsel for the appellants submitted that they are not disputing their service tax liability with reference to renting of shops etc. given to commercial establishments like banks, general shops etc. In fact, they are discharging service tax on the same. 14. We have examined the scope of entry in the negative list along with various clarifications issued by the Government. On harmonious construction of all material facts on record, we find that the appellants are not liable to service tax on shops/sheds/platforms/land leased out in the notified market area for traders for temporary storage of agricultural produce traded in the market. In respect of shops, premises, buildings, etc. r....