TaxTMI 
TaxTMI 
2024 (4) TMI 430
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....ended period of limitation. 2. The appellant - Greater Hyderabad Municipal Corporation (GHMC) is a Local Authority i.e. a Civic Body for the city of Hyderabad, constituted under the authority of GHMC Act, 1955, passed by Andhra Pradesh State Legislature. 3. The Appellant is registered with the Service Tax Department. The Directorate General of Central Excise Intelligence, Hyderabad (DGCEI), initiated investigation into the activities of GHMC in the year 2015 and the proceedings culminated into issuance of Show Cause Notice No. 85/2016- 17(OR. Nos. 21 & 104 /2016-17)(F.No.INV/DGCEI/HZU/ST/04/2016-17) dated 19.12.2016 by the Principal Additional Director General, DGCEI, Hyderabad, proposing to - i) demand an amount of Rs. 30,71,27,798/- as service tax under reverse charge on taxable services viz. "Manpower Recruitment or Supply Agency Service" received by the appellant in terms of the proviso to Section 73(1) of Finance Act, 1994 w.e.f. 01.07.2012 read with Notification No. 30/2012- ST dated 20.06.2012; ii) demand an amount of Rs. 15,18,18,931/-as service tax on the activities of "Road cutting & restoring"/"Right of way for laying of cables" provided by the ap....
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....movable Property i.e. space/land/roads which are under their control/ possession and collecting service consideration/income for rendering/facilitating the above activity. iii) GHMC being service recipient/Body Corporate is liable to discharge service tax liability on the Rent a cab Service under Reverse Charge, in terms of Serial No 9&7 of Notification No.26/2012-ST and 30/2012-ST both dated 20.06.2012. iv) GHMC is collecting service charges on Cell Tower verification Service in the name of permit fee and charges towards verification/clearance/ permission services provided by them to various applicants i.e. Telecom Operators. The said process of granting permission/clearance falls under Business Support Services under Section 65 (104c) of the Finance Act, 1994 up to 30-06-2012 and under taxable service in the Negative List Regime. v) GHMC has not produced invoices or copies of agreements to prove that service tax is not collected separately or the gross amounts charged is inclusive of service tax and has not produced evidence supporting their contention that no service tax had been collected on this count. vi) Though, GHMC vide their letter date....
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....er, in terms of Section 65(14) of the Finance Act, 1994, the same is defined as "body corporate" having the meaning assigned to it in Clause (7) of Section 2 of the Companies Act, 1956. 8.4 Clause (7) of Section 2 of the Companies Act, 1956 reads as under: Section 2 (7) "body corporate" or" corporation' includes a company incorporated outside India but does not include- (a) a corporation sole; (b) a co- operative society registered under any law relating to co- operative societies; and (c) any other body corporate (not being a company as defined in this Act) which the Central Government may, by notification in the Official Gazette, specify in this behalf; 8.5 GHMC is ordinarily not a business entity, carrying out any activity relating to industry, commerce or any other business or profession. GHMC is a 'Local Authority' performing statutory functions, in terms of GHMC Act, 1955 passed by the Andhra Pradesh State Legislature and prescribed functions in terms of Article 243W of the Constitution of India, read with Twelth Schedule of the Constitution. GHMC undertakes public services but not business activities. The Learned Counsel placed r....
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....56 and therefore it is not a body corporate. The learned counsel for the appellant has placed reliance on the case of RAJASTHAN HOUSING BOARD Versus COMMISSIONER OF C. EX., (JODHPUR) [2021 (52) G.S.T.L. 144 (Tri. - Del.)], wherein, in the context of the definition of "body corporate" in Clause (7) of Section 2 of the Companies Act, 1956 the, Tribunal observed that no doubt, Section 4(2) of the Rajasthan Housing Board Act, 1970 describes "RHB" as a body corporate but this body corporate is definitely not constituted under the Companies Act but by Rajasthan Government to have perpetual succession and a common seal with power to acquire hold and dispose of property both movable and immovable and to enter into contracts and may by its corporate name sue and be sued and do all things and acts necessary for the purpose of Rajasthan Housing Board Act. 8.8 Thus, the Learned Counsel for the appellant has argued that the appellant is neither a business entity nor a body corporate nor registered as a body corporate. Hence, the liability under Reverse Charge Mechanism, in terms of the Notification No. 30/2012-ST dated 20.06.2012, in respect of Manpower Supply services & Rent a cab Service, ....
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....yats. The above cited quantum of fee thus indicates its uniform nature for all the applicants in the respective formation. 9.2 GHMC, in discharge of their statutory functions, was collecting the aforesaid fee uniformly from all the applicants who intend to install Telecommunication Infra Structure Towers in the limits of the Municipal Corporation. There is no service recipient and service provider relationship between the applicant (receiver) and GHMC. There is no rendition of service. There is no realisation of service consideration, as the amount collected is only a statutory fee. The fee collected in this case is for regulation of the activity of installation of New Telecommunication Infra Structure Towers. Therefore, keeping in view the guidelines envisaged in the GOs issued by the Telangana State Government, there is no rendition of service in the present case and accordingly the demand is not legally sustainable. 9.3 In terms of Circular No. 89/7/2006-ST dated 18.12.2006, activities performed by the sovereign/public authorities under the provision of law are in the nature of statutory obligations which are to be fulfilled in accordance with law. The fee collected by the....
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....inition of business support service, either during the pre-negative list regime or during the post-negative list regime. When there is no service at all, it cannot be said that the service is out sourced for the purpose of business or commerce. GHMC is not a business entity. iii) As held in a catena of decisions, support services, as specified in the definition of business support service or the services which are in the nature of the said services, only fall under the category of Business support services. By no stretch of imagination, the activity of issuances of Permit/ Certificate in relation to Installation of Telecommunication Infra Structure Tower, in discharge of statutory function, does fall under any one of the specified category of services. The learned counsel for the appellant has relied on the following decisions in support of his contention: SHRIRAM CHITS PVT. LTD. Versus COMMR. OF C. EX., CUS. & S.T., HYDERABAD [2023 (69) G.S.T.L. 397 (Tri. - Hyd.)] SANA ENGINEERING COMPANY Versus COMMR. OF C. EX. & S.T., COIMBATORE [2019 (26) G.S.T.L. 210 (Tri. - Chennai)] iv) As clarified in DOF No 334/3/2011-TRU Dated 28-02-2011, the scope of B....
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....ity of a local authority, implementing the instructions of the State Government. The State Government had entrusted this job to GHMC since maintenance of roads with in the Municipal Corporation limits is one of the charter of duties of GHMC, as a local authority. 10.4 The Learned Counsel for the appellant also contended that the aforesaid activity is not renting of immovable property on the following grounds: i) In the service relating to renting of immovable property, there will normally be an immovable property, a lessor, a lessee and a lease deed for a specific period. None of the above ingredients / elements /factors does exist in the present case. The Telecom operators, the alleged service receivers in this case, (according to Revenue), cannot enjoy the roads, which still remain the property of GHMC. ii) As held by the Hon'ble Madras High Court in the case of CUDDALORE MUNICIPALITY Versus JOINT COMMR. OF GST & C. EX., TIRUCHIRAPPALLI, [2021 (55) G.S.T.L. 397 (Mad.)], in the pre negative list regime, merely renting of immovable property by itself is not sufficient to attract levy as owner of immovable property, renting out property simplicitor was not in co....
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....e. 11. The appellant never collected service tax separately. Whatever collected is the gross amount. GHMC is, therefore, entitled to cum tax benefit as no extra amount was collected towards service tax liability from the service recipients, as held in the decisions relied on by the appellant. Extended period of Limitation and imposition of penalty under Section 78 of the Finance Act, 1994. 12.1 The Learned Counsel for the appellant submitted that extended period of limitation in terms of the proviso to Section 73(1) of Finance Act is not invokable and penalty in terms of Section 78 ibid is not imposable. All the transactions were entered in the books of accounts maintained by the appellant and there is no wilful mis-statement made by them. The entire issue is one of interpretation of the law regarding the levy of service tax and categorisation of the services. The appellant was under a bonafide belief that there is no service tax liability on them, as they are not a business entity registered as a body corporate and the activities of granting permissions, collection of fees etc., are their statutory and regulatory functions and the same were not taxable in terms of the cir....
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....where in the Tribunal held that Rajasthan Housing Board is a body corporate but not constituted under the Companies Act but by Rajasthan Government to have perpetual succession and a common seal with power to acquire hold and dispose of property both movable and immovable and to enter into contracts and may by its corporate name sue and be sued and do all things and acts necessary for the purpose of Rajasthan Housing Board Act, 1970. 14.2 Further to determine whether GHMC is a body corporate or not for the purpose of payment of service tax under reverse charge, the definition of body corporate as contained in Section 65(14) of the Finance Act, 1994 read Clause (7) of Section 2 of the Companies Act, 1956 is relevant, but not body corporate under Section 3(2) of the GHMC Act 1955. As held by the Hon'ble Supreme Court, even if a legal fiction is created by the Legislature, the court has to ascertain for what purpose the fiction is created, and it must be limited to the purpose indicated by the context and cannot be given a larger effect. 14.3 In terms of Section 65B (17) of the Finance Act 1994, "business entity" means any person ordinarily carrying out any activity relating to ....
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....18 (14) GSTL 257 (Tri-Del)]. 15.4 The statutory functions which the appellant is required to perform are clearly listed in Sections 112 and 115 of the GHMC Act 1955. There is no provision in the GHMC Act 1955, authorising the appellant to carry out any business and earn profit .From the scheme of the GHMC Act 1955, we find that the activities of the appellant are not profit oriented. Thus, the appellant is not ordinarily carrying out any activity relating to industry, commerce or any other business or profession. As held by the Tribunal in the case of MAULANA AZAD NATIONAL INSTITUTE OF TECHNOLOGY versus C.C.E, BHOPAL [2019 (27) G.S.T.L. 383 (Tri. - Del.)], "Any other business" in Section 65B (17) is confined to general meaning of any activity which is profit motivated. 15.5 We agree with the learned counsel for the appellant that mere occurrence of some incidental activities of renting of space cannot be basis for demand as held by the Tribunal in the case of SRM ENGINEERING CONSTRUCTION LTD. Versus COMMR. OF S.T., CHENNAI-II [2018 (11) G.S.T.L. 174 (Tri. - Chennai)]. We note that this bench of the Tribunal, in the case of Managing Director APMSIDC Versus Commissioner of Cent....
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....eal No. 30314 of 2023, FINAL ORDER No. A/30360/2023, Dated November 02, 2023). In the said case, it is held that since APMSIDC is a body corporate in terms of the Sec 18 of the Andhra Pradesh Societies Registration Act, 2001, under which it was registered, it is a body corporate. We note that GHMC is not so registered either under the Andhra Pradesh Societies Registration Act or Companies Act 1956. On the other hand, it was brought in to existence by a special enactment i.e. GHMC Act 1955, passed by the Andhra Pradesh State Legislature. We, therefore, hold that GHMC is not a body corporate within the meaning of Section 65(14) of the Finance Act, 1994, read with clause (7) of Section 2 of the Companies Act, 1956. 15.9 We, therefore, hold that the appellant is neither a business entity nor a body corporate. Consequently, the appellant is not liable to pay service tax on Manpower Supply services and Rent a Cab service, under Reverse Charge in terms of Notification No. 30/2012-ST dated 20.06.2012. Accordingly, we allow this ground in favour of the appellant and set aside the demand of Rs Rs.30,71,27,798/- on Manpower Supply services and Rs.1,49,02,365/- on Rent a Cab service under R....
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....ied under this category of service. 16.3 We also agree with the learned counsel for the appellant that in respect of the services provided or agreed to be provided by Government or local authority by way of support services excluding,- (1) renting of immovable property, and (2) services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act,1994,the recipient is liable to pay Service Tax in terms of S.No.6 of Notification No.30/2012-ST dated 20.06.2012. 16.4 Accordingly, we allow this ground in favour of the appellant and set aside the demand of Rs. 1,70,83,907/- 17.1 Regarding the next issue i.e. demand of service tax Rs.15,18,18,931/- on Road Cutting and Refilling Services (Right of Way of Laying Cables), under Renting of Immovable Property Service, we note that in terms of Notification No. 1/2018- dated 30.11.2018, issued under section 11C of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994, and clause (e) of sub-section (2) of section 174 of the Central Goods and Services Tax Act 2017, it is notified that the service tax payable under section 66B of the Finance Act, 1994,during the period commencing on and....