TaxTMI 
TaxTMI 
2023 (8) TMI 252
X X X X Extracts X X X X
X X X X Extracts X X X X
....es 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 Chennai Corporation for the works undertaken by the appellant. 2.3 From....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 commercial complexes and community centres belonging to them and such receipts from rental income had been accounted for and duly stated in their P&L Account. He thereafter observes that the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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, that the appellant did not contest the issue of invoking of extended period of limitation in their submissions. 6. It is against this order that Service Tax Appeal Nos. 438 and 439 of 2012 have been filed before this forum by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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. since they claim that they are a sovereign authority performing duties which are in the nature of statutory and mandatory obligations. The fee they were collecting was in terms of the respective provision of law and the fee / amount so collected was deposited into Government treasury. (v) The appellant falls under the definition of "State" as defined under Article 12 of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt. 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 contesting before the lower authority, there is no specific and elaborate finding given by the adjudicating authority as he was prevented from adjudicating on this issue. 9.3 She would also seriously contend with regard to the appellant's claim as to its status being 'State' under Article 12 ibid., that the same is being taken for the first time before this forum. Further, there is also no finding on this ground nor is there any discussion since this ground was not at all urged before the lowe....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 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 whether the executive function is sovereign in nature is to find out whether the State is answerable for such action in courts of law. It was stated by Sahai, J. that acts like defence of the country, raising armed forces and maintaining it, making peace or war, foreign affairs, power to acquire and retain territory, are functions which are indicative of external sovereignty and are political in nature. They are, therefore, not amenable to the jurisdiction of ordinary civil court inasmuch as the State is immune from being sued in such matters. But then, according to this decisi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 Account and therefore, the fact of rental receipt stands proved. 14.2. The appellant has placed reliance on the decision of the Hon'ble Delhi High Court in the case of M/s. Home Solution Retail India Ltd. v. Union of India [2009 (14) S.T.R. 433 (Del.)], wherein, it has been held that Section 65(105)(zzzz) does not in terms entail that the renting out of immovable property for use in the course or furtherance of business of commerce would by itself constitute a taxable service and be exigible to service tax under the said Act. 14.3 But the very same Hon'ble Delhi High Court in the subsequent / second Home Solution....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 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; (b) "properties" includes information technology software;] 15.2 Before us, the appellant has claimed that the appellant, by virtue of being a State within the meaning of Article 12 of the Constitution of India, is not liable to pay any Service Tax. It has been explained by the appellant that having constructed its own buildings, they had let out on rent and collected only water charges from the tenements for supply of water, which was in turn remitted to the concerned State Government department. A sample agreement between the appellant and the Commissionerate Division - III has been placed on record along with sample receipts, apparently to demonstrate that the demand notices were issued to the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 purposes of this sub-clause, "inputs" means all goods or services intended for use by the client;] (v) production or processing of goods for, or on behalf of, the client;] (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, [but does not include any activity that amounts to manufacture of excisable goods." But however, the Revenue has not specifically pointed out as to which....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 same with the Government exchequer. This, according to us, is not a bona fide act since the collection of Service Tax itself was doubtful, but the non-remittance with the Government account has only aggravated the issue. 18.2 Therefore, we have to hold that it is a clear case of suppression of facts, collecting / deducting Service Tax but withholding the same without remitting to the appropriate Government account, the same has also established the intent to evade payment of tax. 18.3 In view of the above, the extended period of limitation has been rightly invoked and hence, to this extent also, the impugned order is correct. Consequently, the grounds-of-appeal relating to this issue lack merit and they are dismissed. 19.1 The Ld. Advocate has also urged that the services by an entity registered....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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-Appeal No. 332/2015 (STA-II) dated 27.11.2015. Service Tax has been demanded / confirmed under: - (1) MMR Service (2) BAS (3) TIC Service apart from interest under Section 75 of the Finance Act, 1994 and penalty under Section 76 ibid. 22.1 Insofar as Service Tax Appeal Nos. 41525 to 41528 of 2017 are concerned, the same arise against the common Orders-in-Original Nos. CHN-SVTAX-002-COM- 4 to 7 -2016-17 dated 25.01.2017. The above common adjudication order was passed in respect of four SCN/SODs for different periods, which are tabulated hereinbelow: - S. No. SCN/SOD No. Date Period Service Tax demanded (in Rs.) Demand/Interest/Penalty proposed under 1 98/2013 15.04.2013 2011-12 64,91,045/- Section 73(1) Section 75 Sections 76 & 77 2 152/2014 23.05.2014 2012-13 35,16,188/- -do- 3 17/2015 10.03.2015 2013-14 77,85,557/- -do....