TaxTMI 
TaxTMI 
2023 (9) TMI 302
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....se notice dated 31.03.2010. 2. Briefly the facts of the present case are that the respondent Dakshin Haryana Bijli Vitran Nigam is engaged in the distribution of electricity to the domestic, industrial and commercial consumers situated within the jurisdiction of Dakshin Haryana. The respondent is not registered as service provider under the Finance Act, 1994 for the reason that as per respondent's view, they were not liable to pay service tax on their services. That the legislature of the State of Haryana, with a view to consolidate and amend the law relating to municipalities in the State of Haryana enacted the Haryana Municipal Act, 1973. It is provided in section 70 of the said statute that subject to general or special orders of ....
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....amount of municipal tax shall be maintained in the operation Divisions/ Sub-Divisions of the respondent. A copy of Circular No. 60/200 dated 21.11.2002 issued by the respondent has also been enclosed. During the period April, 2004 to March, 2009 the respondent retained collection charges of Rs.4,57,92,173/- in lieu of collecting municipal tax for and on behalf of various municipal committees. Further, the Department took a view that the collection charges, so retained by the respondent, were liable to service tax under the category of "Business Auxiliary Service" as defined in section 65(19) of the Finance Act, 1994. Accordingly, the Commissioner of Central Excise, Rohtak issued show cause notice demanding service tax of Rs. 53,72,....
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....d the impugned order and submitted that the taxability of services under category of 'Business Auxiliary Service' is based on the principle that the assessee provides services on behalf of a business entity. The municipal committees for whom the respondent are collecting tax @ 5 paise per unit of electricity consumed by the consumer are not engaged in any business activity. He further submitted that the Constitution of India empower the State to authorize by law a municipality to levy collect and appropriate taxes and duties as may be specified in law. He also submitted that the provisions of section 70 of the Haryana Municipal Act 1973 empower a municipal committee to impose specified taxes tolls and fees including tax on consumption of el....
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....bmissions of both the parties and perusal of material on record, we think it appropriate to examine the definition of 'Business Auxiliary Service' during the relevant time which is defined under Section 65 (19) of the Finance Act, 1994 and is reproduced herein below:- "Business Auxiliary Service" means any service in relation to, (w.e.f. 10-9-2004) - (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 (v) production or processing of go....
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....t engaged in sale of goods or services, hence, none of the clauses from (i) to (vi) of Business Auxiliary Service definition are applicable to the activity of collection of municipal tax by the respondent. The respondent was providing services to the municipal committee but not on behalf of the municipal committee. The incidental or auxiliary services referred to clause (vii) of BAS definition are applicable in relation to activities covered by clauses (i) to (vi). Since none of these clauses are applicable in the case of respondent, the question of taxability of incidental or auxiliary services such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts etc. does not arise in the hands of the respondent. ....