TaxTMI 
TaxTMI 
2023 (2) TMI 831
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....n of toll tax (user fee) at designated sites. NHAI is authorised to impose and collect such user fee for use of highways under of National Highways Act, 1956 read with relevant Rules. The NHAI invited bids from contractors for collection of toll at specified locations for specified period by issuing tenders for the same. In response to one such tender, the appellant had submitted their proposal which was accepted by NHAI. The Appellant was thereafter given the right for collection of toll charges. Following the receipt of an intelligence that the appellant was engaged in providing taxable service and was not registered with the Service Tax department, he was asked to submit various documents to the jurisdictional Service Tax authority. On completion of the investigation, a show cause notice dated 17.12.2015 was issued to the Appellant alleging that the Appellant was rendering services to the user of highway on behalf of NHAI to collect the user fee; and that on account of these services, the Appellant was liable to pay the amount to the NHAI only to the extent of bid amount as per the contract and entitled to retain the amount over and above the bid amount towards its consideration....
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....dicated below by way of a demand draft / pay order for the said section of National Highway] 6. A plain reading of the contract makes it abundantly clear that the appellant is an independent Contractor, having their own separate and independent establishment and are engaged in providing service on contract basis. The amount payable by the appellant to NHAI was fixed as per the contract, and any loss or profit arising out of such collection, is to be borne by the appellant. Attention was drawn to the amount paid to NHAI in financial year 2013-2014 which was more than the amount collected by the appellant as toll tax. This clearly indicates that the appellant was granted the right and collection of toll by NHAI for a fixed amount, which was regulated by the provisions of NHAI Act and user fees Rules. She relied on Recitals B and C of the contract to buttress her arguments. As regards the allegation of the appellant acting as Commission Agent, learned counsel argued that explanation (a) to section 65(1) of the Finance Act, 1994, presupposes existence of 3 parties. In the instant case, there are only 2- viz: NHAI and the appellant. Thus the appellant's activities cannot be that ....
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.... towards their services is a consideration in terms of Section 67 of the Act ibid. 8. Learned authorised representative further submits that the service provider was appointed as contractor under the contract to run the toll plaza on behalf of the NHAI and were given rights to collect the toll user fees from the users of the highway or bridge on behalf of the NHAI. Therefore, they were collecting toll fess from the users of the toll road on behalf of NHAI and also providing service of access to toll road on behalf of the client. Therefore, their services were definitely covered under the provisions of service as commission agent in terms of clause (a) (ii) and (iv) of the Explanation given under Section 65(19) of the Finance Act, 1994 and are taxable under the provisions of Section 65(105)(zzb) of the Act ibid upto 30.06.2012. With effect from 01.07.2012, as per Section 65B(44) all services became taxable except the services specified in negative list under Section 66D of the Act. As per the clause (h) of Section 66D of the Act, only service by way of access to a road or a bridge on payment of toll charges is covered in the negative list. This clause grants exemption from levy of ....
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....legation that the appellant worked as an 'Commission Agent' on whose behalf he collects the toll, appears to have overlooked the underlying scheme of the tender which brought the appellant into this transaction. The contractual arrangement between the appellant and NHAI was for undertaking the collection of toll or user fee. The terms of the contract is very clear: possession of the 'Kanwaliyas Toll Plaza' asset is transferred to the appellant for the stream of lumpsum payment guaranteed by the appellant. Any deficit returns owing to decreased vehicular traffic or any other reason affects the revenue steam of the appellant. A 'Commission Agent' is akin to a channel partner in delivery of goods/service, wherein the Principal bears all the risks. In the instant case, the tax liability does not arise by way of being Commission Agent as per section 65(19) of the Finance Act, 1994 for the period prior to introduction of negative list regime. 12. We note that this issue under consideration is squarely covered by the order of this Tribunal in the case of Souvenir Developers India Pvt. Ltd vs Commissioner of Central Excise, Customs & Service Tax I (Supra). The relevant extract is as follo....
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....erate 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 State is intended to assure proper maintenance of the asset and fixation of rates is retained by the Government to prevent exploitative exaction both of which are mandated by public interest and not as a facet of principal-agent equation. Thus, tax liability does not arise by way of being 'commission agent' in Section 65(19) of Finance Act, 1994 for the period prior to introduction of 'negative list' regime. 13. Insofar as the period after 1st July, 2012 is concerned, the adjudicat....