TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 401
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....ght from M/s National Highway Authority of India and/or from Maharashtra State Road Development Corporation (MSRDC) to collect the toll in auction In case of Respondent MEP, it was created by M/s IRBPL as Special Purpose Vehicle (SPV) for the collection of Toll. M/s MEP, M/s IRBPL and M/s MSRDC entered into tripartite agreement under which the SPV i.e the Respondent agreed to pay a fix amount to MSRDC and collect the toll from the users of road/ bridge. M/s MEP were issued show cause notice dt. 23.10.2012 on the ground that as per the terms of the tripartite agreement signed between the MSRDC, M/s IRBPL and Respondent, it is observed that the Respondent are authorized to collect toll by the MSRDC Ltd. on its behalf subject to fulfilling of the conditions therein. The Respondent's annual report for the period 2007 07 to 2011 12 declares its revenue as income from 'toll collection'. The Respondent have undertaken the services of collection of toll for the period mentioned in the contract on behalf of corporation for which they were, as per the contract terms, allowed to retain part of the toll collected as consideration for such service provided to the corporation which i....
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....ice tax is levied on amount retained by the independent entity engaged by the SPV to collect the toll from users under the category of business auxiliary service. Since the Respondent is an independent entity engaged by the NHAI/ MSRDC to collect the toll, as per the clarification, the service tax is payable. He also submits that the decision of Tribunal in case of M/s Intertoll India Consultants - 2011 (24) STR 611 (TRI) relied upon by the Commissioner has not been accepted and has been appealed against before the Hon'ble Supreme Court. That the decision of the Tribunal in case of Ideal Road Builder Private Ltd. - 2013 (31) S.T.R. 350 (Tri. - Mumbai) is distinguishable as the agreement was between the State Authority and concessionaire was for the construction of road and the contractor was authorized to collect the toll. Since the entire activity was in the form of BOT agreement no service tax was payable which is exactly as per Para 4 of the Circular dt. 22.02.02012. That the observation of the Chief Commissioner, Mumbai II that the issue is squarely covered by the observation of the tribunal in Para 4 in case of Ideal Road Builders Pvt. Ltd as reported in 2012 (57) STR 57 (TRI)....
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....Builders P. Ltd. Vs. Comr. of ST Mumbai - 2015 (40) STR 480 (TRI MUM). (vii) Intertoll India Consultants (P) Ltd. Vs. CCE, Noida - 2011 (24) STR 611 (Tri Del). He also submits that the demand in SCN has been raised without specifying the precise clause of "Business Auxiliary Service" based on which the service tax is demanded. He quotes clause clauses (i) to (vii) of the definition of Business Auxiliary Service and submits that none of the clause is applicable in the present case. He also submits that the Appellant has placed reliance on Para 3 of the Board Circular dt. 22.02.2012 which is as under : 3. However, if the SPV engages an independent entity to collect toll from users on its behalf and a part of toll collection is retained by that independent entity as commission or is compensated in any other manner, service tax liability arises on such commission or charges, under the Business Auxiliary Service [section 65(105) (zzb) read with section 65(19) of the Finance Act, 1994]. He submits that the reliance on aforesaid Para is wrong as the same is not applicable in the instant case. They do not collect toll on behalf of NHAI/ MSRDC as explained in above Para. The toll retai....
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....Hon'ble Supreme Court in case of CIT Vs. B.C. Srinivasa Shetty - 1981 (128) ITR (284) SC to support his claim. He also submitted that toll collection activity has been treated as Business by NHAI/ MSRDC and the money flowing to NHAI/ MSRDC as bid price. Nowhere their activity has been treated as on commission. Without prejudice to his submission on merits, he also submits that the demands are time bar as the non-payment of service tax on such transactions has been known to the department and various judgments has been passed in the favour of parties. That the demand of only Rs. 10,30,41,783/- computed after reducing the overstated amount is only within the normal period of limitation. Also since the issue involved is not of suppression but of interpretation, therefore no penalty is imposable against the Respondent. In case of Respondent M/s IRBPL similar arguments has been advanced. It is submitted that they have not represented MSRDC or acted as agent of MSRDC to collect toll. They have acquired right to collect toll in auction for an upfront lump sum payment and hence the same cannot be considered as service. Apart from merits they also pleaded that the revenue has not challenged....
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....maintaining and management of national state highways which is a statutory function. They have not been engaged in the said activity as business. In such case it cannot be said that the Respondents has been providing auxiliary service to any business. The Business Auxiliary Services has been defined under Finance Act, 1994 as under : "(19) "business auxiliary service" means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) procurement of goods or services, which are inputs for the client; or Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, "inputs" means all goods or services intended for use by the client; (v) production or processing of goods for, or on behalf of, the client; (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, ma....
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....Guntur - 2011 (24) STR 738 (Tri-Bang), the Tribunal while allowing the appeal of the Assessee held that - "National Highway Authority of India cannot be treated as the customers of the said Appellant. It also observed that the NHAI is not running any business. In such view of the Tribunal we are unable to appreciate that the Respondent is rendering any 'Business Auxiliary Service'. Thus we are in agreement with the judgments cited supra by the Respondent and hold that the Respondent is not rendering any business auxiliary service." We also find that the Respondent's case is not even concerned with charging commission from NHAL or MSRDC unlike the judgments cited above. They stand on better footing than the cases cited by the Counsel for the Respondents as in the present case they had secured the right to collect the toll from NHAI/ MSRDC in a bid for lump sum amount. This amount is to be paid to NHAI/ MSRDC irrespective of any quantum of toll collection. The toll collection is not being done on commission basis or in lieu of any remuneration. All the proceeds of the toll collection belong to the Respondents with no interference or right of NHAI/ MSRDC. The income so ....