TaxTMI 
TaxTMI 
2022 (5) TMI 868
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....WGEL) and M/s Maharashtra State Road Development Corporation Ltd (MSRDCL) for 'toll collections' on specified sections of the highways in the two states entrusted to them for construction or upgradation by the respective state governments, offered the highest assured payment at specified intervals to emerge as the designated operator. The expenditure for maintenance of the assigned section was to be met from the 'toll collected' at rates determined by the government from time to time with the balance, if any, after the setting off the lumpsum payments being the returns to the operator. The non-payment of tax on this 'consideration' led to issue of show cause notice culminating in the impugned order. 3. The appellant herein contends that, in their 'principal to principal' transaction with risk of loss assumed by them, the amount retained is not 'commission', as alleged by service tax authorities, but profit which is beyond the reach of Finance Act, 1994. It is further contended that the issue stands decided in their favour by decisions of the Tribunal in Intertoll India Consultants (P) Ltd v. Commissioner of Central Excise, Noida [2011 (24) STR 611 (Tri-Del)], in Ideal Road Build....
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....s of M/s Maharashtra State Road Development Corporation Ltd (MSRDCL) and M/s Gujarat Road and Infrastructure Company Ltd (GRICL) respectively, after remitting the lump-sum amount assured in their successful bid were liable to tax under section 65(105)(zzb) of Finance Act, 1994 as 'consideration' for rendering of 'business auxiliary service', the adjudicating authority has been influenced by the deployment of 'commission' to describe such amounts therein and the seeming appearance of being an agent with no control over the determination of user charges as leading to the inevitable conclusion of 'commission agency' being the contractual intent of both sides. 6. Strangely, it was also posited in the very same order that this transaction also fits within 'provision of service on behalf of the client' which is yet another enumeration in the definition. As 'commission agent' was considered deserving of separate inclusion among the activities enumerated in the definition, the two are mutually exclusive and the hesitancy in narrowing the nature of the activity to one or the other is at odds with certainty that should guide taxation. It appears to us from '8. The activities perf....
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....tants (P) Ltd holding that '8. At the outset, we find that NTBCL was declared as owner of the DND bridge by the Noida Authority under the Govt. of U.P. The owner had given rights of collection of toll tax to the appellant and to retain a percentage of it and remit the balance. It can be seen that the appellant herein is collecting an amount as toll from the users of the DND bridge. To our mind, the users of toll fee paid bridge cannot be considered as customers. The persons who are using the DND bridge cannot be called as customers of either the appellant or NTBCL for a simple reason, because the expression 'customer' as defined in Advanced Law Lexicon read as under:- "Customer is a person with whom a business house or a business man, has regular or repeated dealings; a purchaser of goods; one who frequents any place of sale for the sake of purchasing or ordering goods. A business customer is one who has the use and habit of resorting to the same person or place to do business; therefore, a stranger who goes into bank to get a cheque collected, is not a customer of the bank." It can be seen from the above definition, a person is considered as customer of ....
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....the said presumption as it is possible that a lot of road users would be using the said product on daily, weekly, or monthly basis and thus qualifying as customer even by definition relied upon in the case of Intertoll (supra). It is seen that the appellants were responsible to all maintenance services for traffic. They were also responsible to take action during accidents and to clear obstructions, wreckage and broken down vehicles. They were required to ensure road availability of ambulance and toll vehicles at all times. The appellants were also required to arrange and liaison with road transport facilities and local police for the traffic arrangements. In these circumstances, we find that every user is a customer of AMTRL and the appellants are providing services to the customers (the users) on behalf of AMTRL and thus the activity would also be covered under clause (iii) of the definition of BAS. From the above it is apparent that the appellants are providing a bouquet of services to the customers on behalf of the principal AMTRL and thus the appellants are also covered by the clause (iii) of the definition of BAS.' 8. Learned Counsel appears to have relied upon In....
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....es. All these imply that M/s MSRDCL or M/s GRICL are the 'principal' and M/s SDIPL are the 'agent'. Hence, in this case, M/s SDIPL acted as 'commission gent' for providing the services of collection of user fee/toll to M/s GRICL/M/s MSRDCL. M/s SDIPL were also performing various services, incidental or auxiliary, to the said activity such as, regulating the access to the road, standing guarantee for collection of user charges/ toll in the form of security deposits/ upfront fee, etc. The activity of M/s SDIPL is definitely provision of service on behalf of the client i.e M/s GRICL/M/s MSRDCL. Thus, the activity of M/s SDIPL will approximately fall under the service category of "Business Auxiliary Services" as defined under Section 65(19) of Chapter V of the Finance Act, 1994 and is taxable service in terms of section 65(105)(zzb) of the Finance Act, 1994. It is specifically covered at sr.no. (vi) read with (vii) of the definition of "Business Auxiliary Services". For the ease of reference, the same is reproduced below- xxxxxx The Board, vide its Circular No.152/3/2012-ST dated 22.02.2012 has also clarified the matter. The said circular is reproduced as under for ease of ....
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....hat 'principal and agent' relationship existed. 12. The megatrends in infrastructure development of the country in recent decades have increasingly incorporated private sector participation, to a lesser or larger degree, in big projects requiring massive investment for transfer of risk to the private entity - whose core competency it is - and, in return for assured lumpsum payment, also the potential earnings through models such as 'build operate transfer' (BOT) and 'build own operate transfer' (BOOT). The terms of engagement is thus clear: possession of the upgraded/constructed asset is transferred to the appellant for the stream of lumpsum payment guaranteed by the appellant while alienating risk of sub-optimal use and risk of asset deterioration. Any deficit in returns from lower traffic or owing to maintenance costs dents only the purse of the appellant. A 'commission agent' is a channel partner in delivery of goods/service in which the risk of market rejection continues to be borne by the principal and bears no resemblance similarity to the contractual obligation in the impugned transaction of the appellant which is all about risk assumption. Oversight by agencies of the st....