TaxTMI 
TaxTMI 
2018 (1) TMI 1464
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....otal demand of Rs. 51,72,663/- made in show cause notice towards service tax liability and interest thereon. The Notice also proposed to appropriate Rs. 51,69,268/- paid towards above liability and impose penalties under Sections 76, 77 and 78 of the Finance Act, 1994. 1.2 The brief facts of the case are as follows : • The applicant are collecting amounts towards lease/rental charges for shops/complexes/Town Hall/Auditorium/Community Hall/ Market fees for Maintenance/repair of Slaughter house from different parties in the Municipal area spread over Mahaboobnagar Municipality which appear to fall under the category of "Renting of Immovable Property Services". • Intelligence gathered by the officers of Anti-Evasion, Hyderabad-II Commissionerate revealed that the applicant had taken registration with Service Tax department but did not discharge service tax on taxable income received from renting of immovable property during the period from April, 2010 to March, 2015. • The applicant vide letter ROC No. B1/468/2014 dated 23-2-2015, furnished the particulars of revenues/collections received by them for the period 2010-11 to 2014-15 (Up to O....
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....s service tax liability and Rs. 18,46,984/- towards interest thereon out of the total Service Tax demand of Rs. 51,72,663/- and interest thereon made in the Show Cause Notice. With regard to the remaining amount of Rs. 6,49,280/-, they did not admit the service tax liability on the ground that the same pertained to Market Fees and slaughtering of animals and not liable to service tax for the following reasons : • During the relevant period the applicant had collected an amount of Rs. 53,94,600/- towards market fees for providing basic facilities to sellers, purchasers of goods and others, from the contractor who acquired the right of collecting the said market fees/cess from the said seller of goods in terms of Sub-Act 5/1971. The amount so collected cannot be considered as rent received. On the other hand, the amount represents market cess levied in terms of the above Sub Act (sic) and collected by the contractor, on authorization from the Municipality, for providing facilities by the Municipality for sale and purchase of goods. As such, said services are classifiable as 'Business Auxiliary Service' and the said amount collected does not represent the rent collected f....
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....s, including the details of their tax liability, gave a complete and true disclosure of their liability and discharged the entire service tax liability including interest thereon. • With regard to penalties proposed in the SCN, the applicant contended that when penalty under Section 78 was proposed, simultaneous proposal of penalty under Section 76 was impermissible as per settled case laws such as Opus Media & Entertainment v. CCE, Jaipur - 2007 (8) S.T.R. 368 (Tri.-Del.), Bajaj Travels Ltd. - 2012 (25) S.T.R. 417 (Del.), etc. • The applicant cited the cases of Shri Selvakumar Textiles v. CCE, Coimbatore - 2005 (188) E.L.T. 334 (Tri.-Chennai) and Rashtriya Ispat Nigam Limited v. CCE - 2004 (163) E.L.T. A53 (S.C.) in support of their contention that no penalty was imposable on the applicant as they had paid the total service tax amount along with interest prior to conclusion of the adjudication proceedings. • It was also submitted that in the SCN, department had not placed any evidence whatsoever indicating 'mens rea' on the part of the applicant for imposition of penalties as proposed in the SCN. The applicant could not pay the service tax du....
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....he Anti-Evasion Wing of the Commissionerate, the alleged evasion of service tax would not have come to light and hence they are liable for penal action as proposed in the SCN and the applicant's plea for waiver of penalty and immunity from prosecution does not merit consideration. Personal hearing : 4.1 The case was heard on 24-10-2017. The applicant was represented by Shri R. Nageswara Rao, Consultant and no one represented the Department. 4.2 It was submitted by the Learned Consultant that the applicant is a municipality; that the department has issued Show Cause Notice demanding service tax of Rs. 51,72,663/- under Renting of Immovable Property Service; that on pointing out by the department they paid Rs. 51,69,268/- during the course of investigation itself and Rs. 3,394/- after the issuance of SCN; that they also paid applicable interest of Rs. 18,46,984/- and late fee of Rs. 1,95,400/- for delayed filing of ST-3 returns. 4.3 It was further submitted by the consultant that they admit they are liable to pay service tax of only Rs. 45,23,383/-; that the entire amount demanded has been paid to avoid the possible interest liability, in the event of entir....
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....ate. Post-hearing submissions : 4.8 In pursuance of the direction of the Bench at the time of personal hearing, the Counsel for the applicant submitted representative copies of orders for right of collection of Market fee (Thai bazar) and slaughter house along with scheduled rates as notified by the municipality. Findings and decision of the Bench : 5.1 The Bench has gone through the application of the applicant. The Bench also considered the written and oral submissions made by the applicant and the written submissions of the jurisdictional Commissioner. Service Tax and interest : 5.2 This is a case of non-payment of service tax under the category of 'Renting of Immovable Property Services'. Though the applicant paid the entire Service Tax of Rs. 51,72,663/- demanded in the show cause notice, they have disputed the service tax demand on 'market fees' (Rs. 6,18,337/-) and 'slaughter house charges' (Rs. 30,943/-) amounting to Rs. 6,49,280/- on the ground that the amounts received will not be part of the taxable value under 'Renting of immovable property service'. Counsel for the applicant at the time of personal hearing stated that the market fees we....
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....s provided by Agricultural Produce Marketing Committee are classifiable under 'Business Auxiliary services'. Para 5 of the said circular reads as "As statutory bodies, APMCs provide basic facilities in the market area out of the 'market fee ' collected from the licencees, mainly to facilitate the farmers, purchasers and others. APMCs provide a host of services to the licencees in relation to procurement of agricultural produce, which are 'inputs' in terms of the definition given in Section 65(19) of the Finance Act, 1994 itself. To that extent the meaning of 'input' is much wider in scope than the meaning assigned in Rule 2(k) of Cenvat Credit Rules, 2004. Therefore, it is clarified that the services provided by the APMC are classifiable as BAS and hence covered by the exemption under Notification 14/2004-S.T." Further based on the Board's circular, the CESTAT in the case of Agricultural Produce Market Committee v. CCE, Nagpur [2014 (36) S.T.R. 382 (Tri.-Mumbai)] had held that the market fee collected by APMC are exempt from payment of service tax under the category of 'Business Auxiliary Service' under Notification No. 14/2004-S.T. 5.5 The Bench further observes that the d....
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....tering of animals was not a specified taxable service and with effect from 1-7-2012, the services by way of slaughtering of animals was exempted from service tax in terms of S. No. 33 of Notification No. 25/2012-S.T. Hence the Bench holds that no service tax is payable on slaughter house fee collected by the applicant during the impugned period. 5.7 In view of the above, the Bench observes that the demand of service tax on collection of market fee and slaughter house charges is not sustainable and the applicant is entitled to relief of Rs. 6,49,280/- from the total service tax demand of Rs. 51,72,663/-. The applicant is liable to pay the balance service tax of Rs. 45,23,383/- relating to demand of service tax under 'Renting of immovable property service'. As the applicant had paid the entire service tax liability of Rs. 51,72,663/- demanded in the SCN, they are eligible for refund of Rs. 6,49,280/- being the service tax demand on market fee and slaughter house fee. The Bench observes that the applicant has made true and full disclosure of their liability in this Forum and accordingly, considers it fit to settle the Service tax liability at Rs. 45,23,383/- with the applicabl....