TaxTMI 
TaxTMI 
2021 (4) TMI 500
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....ow:- Sl. No. W.P.No. Show Cause Notice bearing ref. No/Dated. Period Amount Order in Original/Dated 1(i) 3969/2018 S.C.N. in C.No.V/ST/15/21/2 017-ST. Adjn. Dated 22.11.2017 (Virudhachalam Municipality) 2012-2013 to 2016-2017 Rs. 39,85,349/- As in Sl. No.1(ii) below. 1(ii) 12489/2018 Order-in- Original No.5/2018-ST in C.No.V/ST/15/21/2018-ST.Adj. dated 06.04.2018 2 8900/2018 S.C.N.No.04/2018 (ST) in C.No.V/ST/15/2/20 18-ST. Adjn. Dated 07.03.2018. (Cuddalore Municipality) 2015-2016 and 2016-2017 Rs. 55,35,216/- 3 31799/2017 i. S.C.N. No.01/2016 (ST) - R - IV-Cud Dated 12.05.16 (Range O.C.No.100/ 16) ii. S.C.N. No.2/17 (ST) Dated 13.02.17 (C.No.IV/09/ 04 /2017-ST. Adjn.) (Cuddalore Municipality) April 2014 to March 2015 Rs. 10,36,709/- + Penalty of Rs. 1,03,671/- Order-inoriginal No.3/2017-ST in C.No.IV/09/04/2017-ST. Adjn. (RO OC No.100/2016) dated 24.03.2017 4. Show Cause Notice at Serial No 1(i) issued to Virdhachalam Municipality has culminated in Order-in-Original No.5/2018-ST in C.No.V/ST/15/21/2017-ST. Adjn. at Serial No.....
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....ctive respondent against the respective petitioner municipalities are challenged on the ground that the petitioner municipalities were not a "person" within meaning of Finance Act, 1994 as it stood prior to 01.07.2012 and thereafter. It is therefore submitted that the question of levying tax on services provided by the respective municipalities cannot be taxed under the provisions of the Finance Act, 1994. 10. Show Cause Notice dated 07.03.2018 issued to the Cuddalore Municipality impugned in W.P.No.8900 of 2018 covers the period between 2015-2016 and 2016-2017 while the Order-in-Original dated 24.03.2017 impugned in W.P.No.31799 of 2017 covers the period 2014- 2015. 11. These proceedings have to be examined in the light of the amended provisions of the Finance Act, 1994 with effect from 01.07.2012 read with, Negative List, Mega Exemption Notification No.25/2012 - ST dated 20.06.2012 and other provisions of the Finance Act, 1994. 12. As far as the challenge to Order-in-Original dated 06.04.2018 impugned in W.P.No.12489 of 2018 is concerned, Order-in-Original covers the period between 2012-2013 and 2016-2017. 13. The learned counsel for the petitioners submitted that the....
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.... article 243 W of the Constitution. 15. The learned counsel for the petitioner further submitted that the exemption under Sl.No.39 to the Mega Exemption Notification No.25/2012 - ST dated 20.06.2012 applies to services by a Government Authority by way of any activity in relation to any function entrusted to a municipality under Article 243W of the Constitution of India. He further submitted that under Article 243W of the Constitution of India, the Legislature of a State may, by law, endow the Municipalities with such powers and authority as may be necessary to enable such Municipalities to function as institutions of self government and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to. 16. He submitted that the following activities have been specified in the 12th Schedule to the Constitution of India for the purpose of Article 243W of the Constitution of India:- 1. Urban planning including town planning. 2. Regulation of land-use and construction of buildings. 3. Planning for economic and social development. 4. Roads....
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....unicipality therein, namely Tenkasi Municipality, in Na.Ka.No.543/2012/A2, dated 27.02.2012 was unsustainable. There the petitioner had challenged the aforesaid communication of the Tenkasi Municipality asking the receipt of service tax for the license granted to him by the said Municipality. 19. Mr.A.P.Srinivas, the learned Senior Standing Counsel appearing for the respondent in W.P.No.31799 of 2017 and W.P.No.12489 of 2018 filed by the respective Municipalities against the respective Order-in-Originals submitted that the respective petitioners have an alternate remedy by way of appeals before the appellate body and therefore, these writ petitions were liable to be dismissed. He further submitted that respective Municipalities were "persons" for the purpose of Finance Act, 1994. He further submitted that the period prior to 2012, even if there was no definition for the word "person", the definition of "person" in the General Clause Act would apply and therefore, the petitioners were liable to pay tax. 20. He further submitted that after 1st July, 2012, the definition of "person" in Section 65B(37) includes a "local authority". The definition of "local authority" includes the....
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.... Finance Act, 2010 amended the provision with retrospective effect and attempted to cure the defect pointed out by the Delhi High Court. 29. Thus, definition of taxable service of "renting of immovable property" and "renting of immovable property" was amended to read as follows:- Definition of Taxable Service taxable service of in "renting of immovable property" Section 65(105)(zzzz) of the Finance Act, 1994. Definition of "renting of immovable property" in Section 65 (90a) of the Finance Act, 1994. To any person, by any other person, by renting of immovable property or any other service in relation to such renting, for use in the course of or furtherance of, business or commerce. Explanation 1: For the purpose of this subclause, "immovable property" includes- (i) building or part of a building, and the land are pertinent thereto; (ii) land incidental to the use of such building or part of a building; the common or shared areas and facilities relating thereto; and (iii) the common or shared areas and facilities relating thereto; and (iv) in case of a building located in a complex or an industrial estate, all common areas and facilities relating thereto, w....
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....nalysis, we are disposed to think that the imposition of service tax under Section 65(105)(zzzz) read with Section 66 is not a tax on land and building which is under Entry 49 of List II. What is being taxed is an activity, and the activity denotes the letting or leasing with a purpose, and the purpose is fundamentally for commercial or business purpose and its furtherance. The concept has to be read in conjunction. As we have explained that service tax is associated with value addition as evolved by the judgments of the Apex Court, the submission that the base of the said decisions cannot be taken away by a statutory amendment need not be adverted to. Once there is a value addition and the element of service is involved, in conceptual essentiality, service tax gets attracted and the impost gets out of the purview of Entry 49 of List II of the Seventh Schedule of the Constitution and falls under the residuary entry, that is, Entry 97 of List I. 31. This Court has also upheld the validity of the above provision. Similar view has been taken by the other High Courts also. There is no doubt that the petitioner municipality was renting immovable propertyto various person in the cours....
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.... either directly or indirectly, advice, consultancy or technical assistance, in relation to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management, of real estate Definition of taxable service in Section 65(105)(v) any service provided or to be provided to a client, by a real estate agent in relation to real estate. 37. Since the interpretation given for the expression "any other person" in this order may have a large scale ramification, it is therefore made clear the interpretation given in this order for the expression "any other person" qua Section 65(105)(zzzz) cannot be uniformly applied to other provisions of the Finance Act,1994 unless they are examined separately and individually on case to case basis for the other services. 38. In my view, service tax was payable only if such services were provided "by any other person" other than the owner, to any person by such renting, for use in the course of or in furtherance of, business or commerce. 39. As the owner of the immovable property who rents out the property simplicitor was not in contemplation in the definition of t....
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.... of Municipalities and Members of other local authorities who receive any consideration in performing the functions of that office as such member; or (B) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (C) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or State Governments or local authority and who is not deemed as an employee before the commencement of this section. ['Explanation 2. - For the purposes of this clause, the expression "transaction in money or actionable claim" shall not include - (i) any activity relating to use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; (ii) any activity carried out, for a consideration, in relation to, or for facilitation of, a transaction in money or actionable claim, including the activity carried out - [(a) by a lottery distributor or selling agent on behalf of the State Government, in relation t....
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....der Section 66B of the Finance Act, 1994 no tax was payable for the services specified in the negative list. The expression "negative list" is defined in Section 66B(34) of the Finance Act, 1994 as those services specified in Section 66D of the Act. 48. Most services provided by the Central or State Government or local authorities are in the negative. Section 66D of the Finance Act, 1994 gives list of 17 service which were grouped under the "negative list". Sl.No.1 to Section 66D which is relevant for the present dispute includes all service provided by Government or a local authority excluding the following:- i. services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government; ii. services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; iii. transport of goods or passengers; or iv. [Support Service]*, other than services covered under clauses (i) to (iii) above, provided to business entities; Note: * Substituted with Any service vide Finance Act, 2015 (20 of 2015), dated 14.05.2015.....
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....Governmental authority' has been defined in the said mega exemption as a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W of the Constitution. Thus some of these local bodies may comprise governmental authorities. 2.4.10. Would various entities like a statutory body, corporation or an authority constituted under an Act passed by the Parliament or any of the State Legislatures be 'Government' or "local authority"? A statutory body, corporation or an authority created by the Parliament or a State Legislature is neither 'Government' nor a 'local authority' as would be evident from the meaning of these terms explained in point nos. 2.4.7 and 2.4.8 above respectively. Such statutory body, corporation or an authority are normally created by the Parliament or a State Legislature in exercise of the powers conferred under article 53(3)(b) and article 154(2)(b) of the Constitution respectively. It is a settled position of law Government (Agarwal v. Hindustan Steel -....
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.... In terms of Section 66B of the Act, service tax will be leviable on all services provided in the taxable territory by a person to another for a consideration other than the services specified in the negative list. The services specified in the negative list therefore go out of the ambit of chargeability of service tax. The negative list of service is specified in the Act itself in Section 66 D. For sake of ease of reference the negative list of services is given in Exhibit A1. In all, there are seventeen heads of services that have been specified in the negative list. The scope and ambit of these is explained in paras below. 4.1 Services provided by Government or local authority 4.1.1 Are all services provided by Government or local authority covered in the negative list? No. Most services provided by the Central or State Government or local authorities are in the negative list except the following : (a) services provided by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services carried out on payment of commission on non government business; (b) services....
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....pient of such service in terms of Rule 2(1)(d)(E) of the Service Tax Rules, 1994 as amended by notification No.36/2012-ST dated 20.6.2012 with effect from 1.17.2012. 56. For support service provided, the recipient was liable to pay tax on reverse charge basis under Rule 2(1)(d)(E) of the Service Tax Rules, 1994 as amended by notification No.36/2012-ST dated 20.06.2012 as in force from 01.07.2012. 57. Therefore, the Petitioner Municipalities can be held liable to pay service tax only for service specified in Sub-Clauses in (i), (ii) and (iii) of Clause (a) of Section 66D of the Finance Act, 1994. 58. As far as renting of immoveable property is concerned, though under Rule 2(1)(d)(E) of the Service Tax Rules, 1994, service tax is payable by the service provider, it has to be held that if such services are provided by a Government or Local Authority, they are exempted under Section 65D(1)(a) of the Finance Act,1994 as amended and as in force from 01.07.2012. Only ancillary service provided by a third party towards renting of immoveable property of a non-governmental or local body will be liable to pay service tax like any other service provider. Therefore, service tax is paya....