2017 (7) TMI 299

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....ality check of defence stores in respect of armaments meant for Army, Navy and Air Force. They have dual responsibility of providing quality assurance of armaments stores manufactured by Ordinance Factory, Khamaria and also stores manufactured by other Ordinance Factory and dynamic proof of ammunition and weapons manufactured by these Ordinance Factories. The appellant is also providing quality audit for the ammunition manufactured by MHA Units located in different states and Union Territories. The dispute in the present case relates to service tax liability of the appellant in respect of consideration received under the heading 'Quality Inspection Charges' collected by the Ordinance Factory, Kamaria, which were credited to the appellants a....

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....been examined, in detail by the Hon'ble J & K High Court, in the above mentioned case. The Hon'ble High Court observed that the appellants are not liable to Service Tax on the testing fee paid to them by the licensed manufacturers of Guns. The relevant portion of the judgement is reproduced below:- "On facts the 5^th respondent is a Government of India establishment assigned with the job of proof testing of fire arms. The proof testing is required as per the statute to manufacture of fire arms for public safety. Under Rule 22 of the Arms Rule, 1962 testing fee alone is collected. The said clarification issued by the Revenue will bind the subordinate assessing authorities and one cannot expect a different order from respondents 6 and 7. A....

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....atory and statutory functions. These age not to be treated as services provided for a consideration. As It involves the safety of the public and it is bounden duty of the State to protect its citizens. Therefore, such activities assigned to and performed by a sovereign/ public authority under the provisions of any law, do not constitute taxable services. Any amount/ fee collected in such cases is not to be treated as consideration or the purpose of levy of service tax......." 11. From the above order of CESTAT, affirmed by Hon'ble the Supreme Court, and Circular No.96 issued by Government of India, Ministry of Finance, Department of Revenue, Tax Resource Unit, New Delhi in Circular No.96/7/2007-ST dated 23.08.2007 as well as the clarific....