TaxTMI 
TaxTMI 
2022 (1) TMI 158
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....p;23.01.2018 2011-12 to 2015- 16 17,90,16,824/- ST/86190/2020 O1/MPM- 01/THCGST01/2021 dated 29.05.2020. April 16 to June 17 19,23,991/- 2.1. Based on intelligence, DGCEI, Mumbai Zonal Unit, on scrutiny of the records of the appellants, found that appellants had collected amounts from individuals/ companies/ corporate / organizations under following headings: a 'Rasta Nuksan Bharpai' for granting permission to telecom companies like M/s Reliance Jio Infocom Ltd etc for laying of Optical Cable Fibre (OCF) on their immovable property and collected 'Right of Way' (ROW) charges against restoration charges for road and permission fees, b. 'Ground rent'; 'Market/ Sports ground/ Apartment and other rent', 'Bhade Patti', 'Pay and Park' 'Bazar Lilaw/ Bazar Auction/ Bazar Fees' and 'Permitted Stall Ground Rent' as being charges for allowing Pay & Park, Market, renting of sports ground etc. c. 'Hospital Raktapedhi Jaga Bhadel Hospital Blood Bank Ground Rent collected from blood bank allowed to operate from Municipal Hospital Building. ....
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....recovered from them under section 75 of the Finance Act, 1994; c. Penalty should not be imposed on them under section 76 of the Finance Act, 1994, d. Penalty should not be imposed on them under section 77(2) of the Finance Act, 1994; e. Penalty should not be imposed on them under section 70 of the Finance Act, 1994 read with rule 7 of the Service Tax Rules, 1994. 2.6 These show cause notices have been adjudicated by the Commissioners as per the impugned order as indicated in the para 1 above. 2.7 Aggrieved by the impugned order appellants have preferred these appeals. 3.1 We have heard Shri Prasad Paranjape, Advocate for the appellants and Shri Nitin Tagade, Joint Commissioner for the revenue. 3.2 Arguing for the appellant learned counsel submitted as follows: • While Orders-in-Original dated 19.01.2018 confirmed the entire demand (except granting cum-duty benefit), whereas, OIO dated 29.05.2020 gave substantial benefit to the Appellant. Order dated 29.05.2020 for which, as per information and knowledge of the Appellant, the Revenue has not filed any appeal the demands made und....
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....he terms of the Agreement dated 22nd June 2007 with Vardhman Developers, for development and reservation of town park on BOT basis and granted lease of land for a period of 30 years. Further, the Appellant has entered into an agreement dated 31 July 2007 with Shreeji Exhibitors for development of a plot of reservation exclusively for playground on BOT basis. Similarly, the Appellant has entered into an agreement dated 18 July 2007 with Deepak Charitable Trust for development of a plot for primary school and playground on BOT basis. All such developmental activities undertaken by the Appellant are covered within the Twelfth Schedule of the Constitution of India under Urban Planning for Economic and Social Development. Thus, being a functions covered by the Twelfth Schedule of the Constitution of India, this is covered by the negative list and not liable to service tax. • Marriage Hall - The Appellant under the Twelfth Schedule of the Constitution of India is obliged to provide for the general public a place for community and religious activities/functions. As part of this function the Appellant lets out certain premises for community halls at its disposal at a very negl....
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....impugned order submits as follows: • The appellant had as per the submissions made before the adjudicating authority agreed to certain Service Tax letter dated 15.11.2017 [Page No 288 of the paperbook in Appeal No ST/86597/18] as well as in their letter / /192/2017-18 dated 29.06.2017 [Page No 108 of the paperbook in Appeal No ST/86597/18]. These demands are in respect of BOT Lease Rent, Blood bank Rent and Mandap Services. • Though the facilitation for the hawkers was made as per Hon'ble Supreme Court's order, and under the constitutional provisions, however, neither Hon'ble Supreme Court not the relevant articles of the Constitution have mandated or allowed levy and collection of charges from such hawkers. Therefore, this amount does not qualify for exemption under Sr No 39 of Mega Exemption Number 25/2012 ST dated 20.06.2012 as being 'services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243W of the Constitution". [Para 5.10 of OIO dated 22.01.2018 - Page 305 of the paperbook in Appeal No ST/86597/18]. • Rasta Nuksan Bharpai/ROW: The appellant has allowed vari....
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....de in respect of Pay and Park Fees, Bazar auction/Bazar fees and Rusta Nuksan Bharpai (ROW). While the adjudicating authority has in the case of notice issued under Section 73 upheld the demands, made, in subsequent order, Commissioner observes as follows: "6. As regards Pay & Park services, the noticee has informed that the same was collected by agents appointed by them and the agents viz. M/s S. S. Enterprises, M/s A-one Care Taker Pvt. Ltd & M/s Om Sai Siddhi had obtained service tax registration numbers ABFPR214QSD001, AAFCA5831PST001 & AKAPP1143PSD001 respectively, and discharging service tax liability themselves. This submission has been supported with copies of challans evidencing payment of service tax by the agents who were appointed by the noticee Since the amount collected against Pay & Park Charges was assessed to service tax by the agents and the same is paid, therefore, demand against noticee for service tax against this amount is not maintainable. 7 As regards 'Bazar auction fee/ Bazar fee, the same was collected by the noticee on either from a fixed place or to operate from street to account of permitting vendors t....
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....cient to hold that the activity is intended to be a sovereign Act of the Nagar Nigam , 6. Resultantly, we are of the opinion that the authority below has wrongly considered it as a service being rendered by the appellant to the said traders. In such scenario, emphasis on the definition of "renting of immovable property" under the Finance Act has no more significance. Further we observe that the Government of India, Ministry of Finance has given the clarification on the issue regarding the levy of tax on the services provided by Government or the local authorities to be business entity vide circular dated 13th April, 2016. Perusal thereof makes it clear that tax on taxes/cesses or duties are not leviable. Though the clarification is post the impugned period, however, being merely a clarification and otherwise also beneficial to the impugned assessee, the same has to be given retrospective effect. . 7. In view of above discussion the order under challenge is hereby set aside and appeal is hereby allowed.' 8. The same issue was considered by the Commissioner CGST, Thane against the noticee and demand was confirmed vide order in original....
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....ne 2012, is unjustifiable, illegal and impermissible under the law and needs to be deducted. As MBMC has not charged and collected any service tax separately on the rent amount of the marriage hall and the same is inclusive of all taxes and reimbursement of expenses, it is requested that the cum-value method of valuation shall be applied and MBMC sincerely offers to pay the service tax as may be reasonably and objectively determined in this regard." [Page 135 of the paperbook in Appeal No ST/86597/18]. 4.5 As per written arguments made at the time of hearing [REF F NO DGCEI/MZUI/1 & IS 'E"/12(2)17/2016 DATED 18/01/2017] also the appellants have admitted their liability to pay tax in respect of these services.: 4 "Ground rent market/ sports ground rent- Provision of urban amenities such as playgrounds for promoting sports and physical activities is a constitutional mandate of MBMC under cl. 12 of the 12th schedule of Article 243W of Constitution of India and in furtherance of the aforesaid mandate MBMC has developed playgrounds under Urban Sports Infrastructure Scheme and collected token amounts for its maintenance and preservation. The amount so collected is....
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....of this notification here. The said notification number 12, 2012 and 121 2012 was rescinded/ modified by Notification Number 25/ 2012 ST dated 20.06.2012. The provisions of Clause 12 of Notification Number 25/ 2012 ST dated 20.06.2012 is the relevant portion which the noticee is relying in self defence and hence I am reproducing the same here: 12. Services provided to the Government a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; (b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958); (C) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment; (d) canal, dam or other irrigation works; (e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (i....
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....ing it themselves. Further, the amount collected as Parking Charges was not deposited with the noticee but it was on contractual basis and the noticee was getting a lump-sum amount for the same. Clause 24 of Notification Number 25 / 2012 ST dated 20.06.2012 provides exemption in respect of 'Services by way of vehicle parking to general public excluding leasing of space to an entity for providing such parking facility. The provision clearly highlights the fact that in instances of leasing activity, the exemption will not be available. Therefore, I am of the opinion that collecting parking charges through M/S S S Enterprises by the noticee is not covered under clause 24 of Notification Number 25/ 2012 ST dated 20.06.2012 even for period prior to its amendment deletion. Similarly, the demand for service tax on Advertisement charges is also maintainable as the Advertising revenue was also generated by the noticee in the same manner as the parking charges, 5.13. As regards the amount collected towards ground rent in respect of Ganpati mandap and for conducting other religious Ceremonies of various Communities it is exempt under entry 5 of the notification 25/2012 ST d....
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.... 6. Public health, sanitation conservancy and solid waste management. 7. Fire services. 8. Urban forestry, protection of the environment and promotion of ecological aspects. 9. Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded. 10. Slum improvement and upgradation. 11. Urban poverty alleviation. 12. Provision of urban amenities and facilities such as parks, gardens, playgrounds. 13. Promotion of cultural, educational and aesthetic aspects. 14. Burials and burial grounds; cremations, cremation grounds; and electric crematoriums. 15. Cattle pounds; prevention of cruelty to animals. 16. Vital statistics including registration of births and deaths. 17. Public amenities including street lighting, parking lots, bus stops and public conveniences. 18. Regulation of slaughter houses and tanneries." 10. On perusal of Entries 12 and 17 clearly show....
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.... public conveniences such as provision of facilities of bathroom, washrooms, lavatories, urinal or toilets; 39. Services by ""Government, a local authority" or" Inserted vide Notification 22/2016 - Service Tax. a governmental authority by way of any activity in relation to any function entrusted to a municipality under 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. "25. From the category of ....
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.... 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 property to various person in the course of or furtherance of, business or commerce of the lessee as defined in Section 65(90a) of the Finance Act, 1994 as it stood during the period between April 2012 and June 2012. However, merely because there was renting of immoveable property by itself was not sufficient to attract the levy. 32. To attract levy under Section 65(105) (zzzz) of the Finance Act 1994 there should be renting of immovable property or provision any other service in relation to such renting, for use in the course of or furtherance of, business or commerce to "any person". Only if service was provided by "any other person", i.e, by a person other than the owner, such service was liable to service tax. ....
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.... 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 taxable service of "renting of immovable property" in Section 65(105(zzzz) of the Finance Act, 1994, demand against the petitioner was without jurisdiction. 40. Since the petitioner municipality is the owner of property, question of it being made liable to pay service tax for any service in relation to such renting of immoveable property does not arise even if it had rented out its immoveable property for use in the course of or for furtherance of, business or commerce of the person who was renting it. 41. ....... 42. I shall now take up demand proposed and confirmed for the period after 30.06.2012 after....
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....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. 49. ....... 50. ....... 51. Only Support services provided by the government or loc....
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....iew of the above decisions we are in agreement with the observations made by the Commissioner to the effect that just because the services under consideration have been provided Municipal Authority, the same cannot be said to be a service covered under Article 243 read with Schedule 12 of Constitution of India. Hence the arguments advanced by the appellant counsel to that effect cannot be sustained, more so over when they themselves have admitted there liability to pay service tax in respect of services under category of BOT, Mandap & Renting of Space to Blood Bank. We agree with the submissions of the appellant to effect that the value of tax able services under these category needs to be redetermined after taking into account the relevant and admissible deductions. 4.9 In respect of the services under the category of Renting of Stall etc., it is the submission of the appellant, that the amount collected by them is fees for providing small space to the street hawkers etc, for selling their goods etc., and is part of their Constitutional Duty for the upliftment and social welfare of the poor. It has also be submitted on the basis of the decisions of Hon'ble Supreme Court, ....
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....and merits invoking of extended period as laid down under proviso to Section 73 (1) of the Finance Act, 1994 and the demand cannot be set aside for issue of limitation." Challenging these findings appellants refer to the observations made by the Commissioner in the second order to the effect - "19. As the noticee is a statutory body and also major portion of the demand is not maintainable, therefore, I am of the opinion that imposition of penalty on the noticee is not warranted." 4.11 The finding recorded by the Commissioner in second order is vis a vis penalty to be imposed. Commissioner has found the justification that being statutory authority cannot be subjected to penalty. Without stating Section 80 of Finance Act, 1994 he for these reasons has refrained from imposing penalties on the appellant. We are in complete agreement with approach adopted by the Commissioner and reaffirm that case like this are fit wherein benefit of Section 80 should be extended to such municipal authorities. However we would make it clear that extending benefit under Section 80 cannot be cited as reason for not invoking extended period of limitation under Section 73. From what has....