TaxTMI 
TaxTMI 
2023 (8) TMI 252
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.... hearing both sides, we find that common issues are involved and hence, all the cases are considered for common disposal. 2.1 Facts in brief, as could be gathered from the impugned Order-in-Original dated 28.03.2012, are that the appellant, a body duly constituted by an Act of the Tamil Nadu Legislative Assembly, is engaged in the construction of houses / apartments and allotting dwelling units to eligible persons. They are also engaged in renting of commercial complexes and community centres throughout the State of Tamil Nadu for commercial purposes and the appellant is also registered with the Service Tax Department for the provision of services under the category of "renting of immovable property". 2.2 It appears that the Department carried out a scrutiny of the records and returns filed by the appellant, during which time they appeared to have noticed that the appellant was collecting charges towards various services provided by them, namely: - (1) Maintenance of Government Rental Quarters; (2) Supervision charges collected as a percentage of the maintenance charges; (3) Testing charges for testing materials like steel, cement, etc. from the ....
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....rganization which only provided housing facilities to the public at affordable prices, such receipts could not be considered as receipts for the services of BAS. * The testing charges reflected in their Annual Report was the amount collected from Chennai Corporation towards testing materials procured for construction of bridges. 3. It appears that the appellant had thereafter requested for dropping of the proceedings insofar as MMR, BAS and TIC are concerned, as recorded at paragraph 2.6 of the impugned order. 4. During adjudication, the adjudicating authority appears to have considered the reply filed by the assessee, who was also heard in person and, thereafter, vide impugned Orders-in-Original No. 06 & 07/2012 dated 28.03.2012 has confirmed all the demands proposed in both the Show Cause Notices. Renting of Immovable Property Service : 5.1.1 With regard to the renting activities of the appellant, Ld. Lower authority/Commissioner has analysed the activity of the appellant vis-à-vis Section 65(105)(zzzz) of the Finance Act, 1994. 5.1.2 At paragraph 4.4 of his order, Ld. Commissioner observes that the assessee had received rental income by renting out....
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....rges in the Annual Report indicate the amount collected from Chennai Corporation towards testing of materials procured by them. Larger Period: 5.5.1 With regard to invoking the extended period of limitation, the Ld. Commissioner has observed that the appellant had clearly contravened the provisions of Section 68 of the Act and Rule 6 of the Service Tax Rules, 1994 with an intent to evade payment of Service Tax. Further, there is also a finding that the appellant had not registered with the Department in respect of any of the services as required, they did not file any periodical returns for the above services; they did not even disclose particulars about the services rendered by them and have not reflected any Service Tax paid for the above services in S.T.-3 returns even after obtaining registration under the category of renting of immovable property service; the non-payment of Service Tax, therefore, surfaced only due to the audit of their accounts by the Department and therefore, there was suppression of facts from the Department thereby causing revenue loss to the Government. 5.5.2 We find from the impugned order that there is also an observation, at paragraph 4.15, th....
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....ing Board. * The above was not a service provided to outsiders and the certificate issued was not accepted by any other party except the appellant and therefore, the same was not a service. * The gross amount collected was also less than the threshold exemption limit applicable for the concerned period. 8. When the matter was taken up for hearing, Shri I. Dinesh, Ld. Advocate, appeared for the appellant and was heard. He also filed written submissions. His contentions could be summarized, as below: - (i) The appellant is a body created by the State Government in 1961 by an enactment namely, the Tamil Nadu Housing Board Act ('TNHB Act' for short), 1961. (ii) The appellant registered with the Service Tax Department under renting of immovable property service on 12.12.2008 and since then, it has been filing S.T.-3 returns, but apparently, not paying Service Tax by placing reliance on Circular No. 89/7/2006 dated 18.12.2006. (iii) The appellant being a body created by the statute, is not liable under the Service Tax Act. (iv) For the period prior to 2012, reliance has been placed on the above exemption Circular No. 89/7/2006 ibid....
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....suppression or evasion of any income with a mala fide intention. (xii) In this regard, he has placed reliance on the following decisions: a. Infinity Infotech Parks Ltd. v. Union of India [(2015) 55 taxmann.com 367 (Calcutta)] b. Anand Nishikawa Co. Ltd. v. Commissioner of Central Excise, Meerut [(2005) 7 SCC 749 (S.C.)] (xiii) The Show Cause Notices issued were very vague and cryptic and do not specify as to what was the default on the part of the appellant. 9.1 Per contra, Smt. Sridevi Taritla, Ld. Additional Commissioner, relied on the findings of the lower authority. She has specifically invited our attention to the findings of the Ld. Commissioner / adjudicating authority at paragraph 4.10 wherein the adjudicating authority has observed that the assessee did not produce any evidence in support of its claims. 9.2 She would also refer to the concluding portion of paragraph 4.15 of the impugned order dated 28.03.2012 wherein the adjudicating authority has specifically recorded that the appellant did not contest the invoking of extended period of limitation and therefore, this ground may be dismissed. On this, she would submit that by not ....
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....of Article 12 has no bearing on whether Service Tax could be levied on that assessee. 12.3.1 The other contention urged on behalf of the appellant was that the assessee is a sovereign / public authority performing duties which are in the nature of statutory and mandatory obligations, to be fulfilled in accordance with law. 12.3.2 The Hon'ble Apex Court had an occasion to consider 'Sovereign' in the context of the Industrial Disputes Act, 1947, in the case of Agricultural Produce Market Committee v. Shri Ashok Harikuni and Another etc. [AIR 2000 SC 3116]. After considering the rival contentions, the Hon'ble Court held as under: - "20. In relation to what are "sovereign" and what are "non-sovereign" functions, this Court in Chief Conservator of Forests and Anr. vs. Jagannath Maruti Kondhare and Ors., 1996 (2) SCC 293 , holds; We may not go by the lebels. Let us reach the hub. And the same is that the dichotomy of sovereign and non-sovereign functions does not really exist - it would all depend on the nature of the power and manner of its exercise, as observed in para 23 of Nagendra Rao case. As per the decision in this case, one of the tests to determine wheth....
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....f, cannot confer it the status of performing inalienable functions of the State. The main controlling functions and power is conferred on the market committee whose Constitution itself reveals, except one or two rests are all are(sic) elected members representing some on other class from the public. In fact, all governmental functions cannot be construed either primary or inalienable sovereign function. Hence even if some of the functionaries under the State Act could be said to be performing sovereign functions of the State Government that by itself would not make the dominant object to be sovereign in nature or take the aforesaid Act out of the purview of the Central Act." (Emphasis supplied) 12.3.3 In view of the above clear observation by the Hon'ble Apex Court, we decide this issue against the appellant. 13. We now proceed to consider the individual issues marked at paragraph 11 (2) above. Renting of Immovable Property Service : 14.1 Insofar as renting of immovable property is concerned, we find that there is a clear finding by the adjudicating authority that the appellant had in fact received rental income, which was also reflected in their P&L A....
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....ion. Being of this view, we overrule the said decision." 14.4 In view of the above 3-Judge Bench decision in M/s. Home Solutions Retails (India) Ltd. (supra) the appellant cannot escape the Service Tax liability and hence, we find that the impugned order, to this extent, is in order. The grounds-of-appeal insofar as this ground is concerned are dismissed. MMR Service : 15.1 The second issue is relating to MMR service. Section 65(64) of the Finance Act, 1994 as it stood during the relevant point of time, reads as under: - "[(64) "management, maintenance or repair" means any service provided by - (i) any person under a contract or an agreement; or (ii) a manufacturer or any person authorised by him, in relation to, - (a) management of properties, whether immovable or not; (b) maintenance or repair of properties, whether immovable or not; or (c) maintenance or repair including reconditioning or restoration, or servicing of any goods, excluding a motor vehicle;] [Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this clause, - (a) "goods" includes computer software; ....
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....e appellant would collect a nominal fee towards scrutinizing charges from the allotees, which is a part of the sale proceeds, which is fixed by the Government itself. They have referred to Section 66 of the TNHB Act which authorizes the appellant to provide technical advice and scrutinize all projects. 16.2 In the impugned order, the adjudicating authority has only referred to the Annual Report, which is a statutory report wherein the receipts from 'scrutiny charges' have been shown as income in Schedule-4 and the receipts from 'supervision charges for deposit works' have been shown as income in Schedule-3. 16.3 Section 65(19) defines business auxiliary service to mean: - "(19) "business auxiliary service" means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) procurement of goods or services, which are inputs for the client; or Explanation. - For the removal of doubts, it is hereby declared that for the pu....
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....service charges by deducting from the total consideration being paid to the contractors. That means, the said service was rendered to the contractors, for which payment is also made. The income so generated is thus shown as income under the category of 'Quality Control inspection testing fees' in Schedule-4 to their P&L Account. In any case, it is not the case of the appellant that such contractors were not on their rolls and that what was paid to them was only salary. If it is their view that it is not taxable, then why the service charges were deducted from payments and under which provision did they do so has not been explained anywhere by the appellant. 17.3 In view of this, the finding and the consequential demand on this issue in the impugned order is sustained. The grounds-of-appeal on this issue are therefore not entertained. Extended period of limitation: 18.1 We have seen that the Show Cause Notices cover the periods 2004-05 to 2008-09 and April 2009 to March 2010. We find that insofar as at least one of the issues is concerned, the Service Tax has been collected / deducted from the payment made to contractors, but having so deducted they have not remitted the sa....
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....Committees were not exempted from payment of service tax on such activities. At this stage, it is required to be noted that it is not the case on behalf of the Market Committees that the activity of rent/lease on shop/land/platform as such cannot be said to be service. However, their only submission is that the Market Committees are exempted from levy of service tax on such service/activity as provided under the 2006 circular, which as observed hereinabove has no substance." In view of the above, this contention of the appellant is not entertained. 20. In view of our above discussions, Service Tax Appeal Nos. 438 and 439 of 2012 are partly allowed and partly dismissed, as under: - (1) On the issue of renting of immovable property, the appeals are dismissed. (2) On the issue of MMR service, the appeals are partly allowed by way of remand. (3) On the issue of BAS, the appeals are allowed. (4) On the issue of TIC service, the appeals are dismissed. (5) The issue of extended period of limitation is also held against the appellant. 21. Insofar as Service Tax Appeal No. 40374 of 2016 is concerned, the same arises against the Order-in-....