TaxTMI 
TaxTMI 
2025 (1) TMI 1258
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....rieved by the confirmed demand, the appellant - assessee [ADDA] is before the Tribunal. The Revenue being aggrieved by the demands so dropped, have preferred their own appeal against the said impugned order. Both these appeals have been taken up together for Hearing. 3. The summary of submissions made by the Ld Counsel appearing on behalf of the appellant assessee is as under : 3.1 No basis to the calculation of the demanded amount of service tax (1) In course of arriving at the demanded amount of service tax proposed in the Show Cause Notice, the Department placed reliance on figures obtained from the bank statements of the assessee for the said period. The bank account references, and the total figures drawn therefrom are tabulated in Annexure A to the Show Cause Notice (vide page 21 of the Paper Book dt. 15.7.2014). (2) A bare perusal of such tabulation will indicate, that no details are provided of the specific transactions reflected in the bank statements that the adjudicating authority deemed to be taxable. No copy of the relied upon bank statements even form part of the specified enclosures to the Show Cause Notice (vide page 17 of the Paper Book dt. ....
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....7.1 thereof, that "the assessee is merely a disbursing authority and is required to oversee the proper utilization of the funds given for and on behalf of the ULBs (Urban Land Bodies) of the State Government. We also find that the State Government also directs the assessee to make use of the funds collected such as land premium, ground rent, etc on behalf of the Government and according permission for the same to be invested in bank for onward utilisation of its earmarked purpose." (3) The Hon'ble ITAT accordingly observed in paragraph 7.1 that the assessee abovenamed was "an agent of the Government" "and had merely acted as a custodian of funds belonging to the Government". Such Order of the ITAT dated 8.9.2017 has since attained finality in view of the appeal thereagainst before the Hon'ble High Court at Calcutta being dismissed by Order dated December 19, 2019 in Appeal No. ITAT 230 of 2018 (vide page 32 of Compilation dt. 24.4.2014) (4) Such view of the Hon'ble ITAT can be verified from the Notifications issued under the TCP Act, as contained in pages 74 to 78 of the Compilation dt. 24.4.2014, and pages 194 to 199 of the Paper Book dt. 15.7.2014. Such notifica....
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....e and deposited in a Special Fund (1) Further, a perusal of Sections 106 and 107 of the TCP Act shall also reveal that development charges are to be collected thereunder "as arrears of land revenue" and that every development authority "shall keep in current account in any branch of the State Bank of India or any other Bank approved by the State Government in this behalf, such portion of its fund as may be prescribed and any money in excess of the said sum shall be invested in such manner as may be approved by the State Government." 3.4 No leave of CBEC taken prior to initiating adjudication against the assessee abovenamed in violation of Circular dt. 10.11.2006 (1) By the said Circular dated 18.12.2006, the CBEC had clarified that services rendered in pursuance of mandatory and statutory function are in public interest and hence, cannot be taxable under the Act. Notably, by another Circular No. 354/59/2006-TRU dated November 10, 2006, the CBEC had also instructed that "in any case where it is proposed to levy service tax on a service provided by a department of the central government or state government, the same may be referred to the Board". No such leave ap....
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.... which has a legal mandate to govern, or administer a part [of] some aspect of public life". (vide page 110 of Compilation dt. 24.4.2024) (3) Likewise, in CGST, Delhi III v. Delhi International Airport Ltd, 2023 (74) GSTL 129 (SC) (vide page 96 of Compilation dt. 24.4.2024), it was observed that that user development fee collected by private licensees of Airport Authority of India for providing services in passenger lounges, rest rooms and other facilities in airports or in relation to passenger amenities, is in the nature of a statutory levy which is monitored and regulated by law in public interest and is hence, not taxable under the Act (see paragraphs 1, 7, and 39 at pages 96, 98 and 103 of the Compilation dated 24.4.2024 respectively). (4) Such view that services rendered in pursuance of statutory obligation are not taxable under the Act, has been reiterated recently by the Principal Bench of this Hon'ble Tribunal, in Directorate of Agricultural Engg. v PCC, Bhopal, 2023 (73) GSTL 377 (T) (vide page 134 of the Compilation dt. 24.4.2024) 5. Based on the above submissions, he prays that the present appeal filed by the assessee ADDA may be allowed on merits. ....
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.... (i) Services by the Dept of Posts by way of Speed Post, express parcel post, life insurance and agency services provided to a person other than Government (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; (iii) transport of goods or passengers; or (iv) [Any service], other than services covered under clauses (i) to (iii) above, provided to business entities; SECTION 65B. Interpretations. - In this Chapter, unless the context otherwise requires,- '(26A) "Government" means the Departments of the Central Government, a State Government and its Departments and a Union territory and its Departments, but shall not include any entity, whether created by a statute or otherwise, the accounts of which are not required to be kept in accordance with Article 150 of the Constitution or the rules made thereunder;' Article 150 - The Constitution Of India : 150. Form of accounts of the Union and of the States. The accounts of the Union and of the States shall be kept in such form as the President may, on the advice of the Comptroller and Auditor General of Indi....
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....such manner as may be approved by the State Government." 14. A careful and harmonious perusal of the above details, would clarify that the ADDA has been created under a specific statute and it performs all acts on behalf of the State Govt of West Bengal. Their accounts, income and expenditure etc. are all controlled by and are answerable to the State Government. Therefore, we have no hesitation to come to a conclusion that ADDA is performing sovereign functions on behalf of the State Government of West Bengal. 15. The Bangalore Bench of CESTAT in the case of Karnataka Industrial Areas Development Board v. CCT, Bangalore (North), 2020 (40) GSTL 33 (T), the coordinate Bench of Bangalore has held as under : 7.3 The issue whether the statutory authority performing statutory functions as provided under a statute is liable to service tax or not has been considered and decided by catena of judgments rendered by various Courts. In the case of Maharashtra Industrial Development Corporation (MIDC) cited supra, the Hon'ble Bombay High Court has categorically held that no service tax could be demanded on the charges collected by the MIDC, in terms of MID Act, 1961 towards mainte....
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....tion of having provided them various facilities including maintenance, management and repairs of the facilities in the MIDC area. As stated earlier, reliance is placed on clause (64) of Section 65 of the said Act. As pointed out earlier, MIDC is already registered under the category of "renting of immovable property" and for services covered by such category; MIDC is admittedly paying Service Tax. Further the Hon'ble Bombay High Court has held in MIDC case as under :- 11. The Apex Court categorically held that functions and powers of MIDC indicate that the said Corporation is acting as a wing of the Government. In the case of Managing Director, Haryana State Industrial Development Corporation, the Apex Court was considering the role played by Haryana State Industrial Development Corporation. The Apex Court held that the said Corporation discharges sovereign functions. The Apex Court also held that considering the objects and purport for which the said Corporation of Haryana has been constituted, the function discharged by the Corporation must be held as Governmental function. 14. MIDC is a statutory Corporation which is virtually a wing of the State Gover....
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....Officer (RTO) issues fitness certificate to the vehicles; the Directorate of Boilers inspects and issues certificate for boilers; or Explosive Department inspects and issues certificate for petroleum storage tank, LPG/CNG tank in terms of provisions of the relevant laws. Fee as prescribed is charged and the same is ultimately deposited into the Government Treasury. A doubt has arisen whether such activities provided by a sovereign/public authority required to be provided under a statute can be considered as 'provision of service' for the purpose of levy of service tax. 2. The issue has been examined. The Board is of the view that the 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 them for performing such activities is in the nature of compulsory levy as per the provisions of the relevant statute, and it is deposited into the Government Treasury. Such activity is purely in public interest and it is undertaken as mandatory and statutory function. These are not in the nature of service to any particular individual for any consi....
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.... Hording Charge Schedule-8 Water connection charge 2552259 Total 2007-08 18583702 0 18583702 12% 2230044 44601 22300 2008-09 Rental Income Ground rent, house rent 760451 License fees 7655211 Hire Charges of Road Roller 70400 Other Income Sche-18/1 Electricity Installation 1384921 Sewerage connection 1968279 Hording Charges 3163342 Sub-lifting & Way lease 1018750 Sche-12/2 Water connection charge 2663666 Total:- 2008-09 1868....
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....ioning and Installation Service Commercial & Industrial Construction Service Total (Rs.) 2007-08 16,31,75,253 88,21,061 1,47,620 17,21,43,934 2008-09 96,36,412 31,63,342 70,400 1,28,70,154 2009-10 1,83,91,455 9,65,134 85,540 1,94,42,129 2010-11 2,23,92,667 10,96,833 - 2,34,89,500 2011-12 1,31,81,707 11,77,690 - 1,43,59,397 Total 22,67,77,494 1,52,24,060 3,03,560 24,23,05,114 E) TOTAL SERVICE TAX LIABILITY Year Total taxable value (Rs.) Service tax payable (Rs.) Cess (Rs.) S& H.E.Cess (Rs.) Total (Rs.) 2007-08 17,21,43,934 2,06,57,272 4,13,145 2,06,572 2,12,76,989 2008-09 1,28,70,154 15,44,418 30,888 15,444 15,90,750 2009-10 1,94,42,129 19,44,213 38,884 19,442 20,02,539 2010-11 2,34,89,500 28,18,740 56,375 28,187 29,03,302 2011-12 1,43,59,397 17,23,128 34,462 17,231 17,74,821 Total 24,23,05,114 2,86,87,771 5,73,754 2,86,876 2,95,48,401 ....