AI Drafter 
TaxTMI 
TaxTMI 
2025 (12) TMI 454
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....rty data exchange policy, it was revealed that the respondent, having PAN AOIPK8254M, had not paid service tax on the taxable amount of Rs.3,06,50,318/- as shown in their Income Tax records for the F.Y.2016-17. 2.2 Accordingly, a show cause notice dated 18.10.2021 was issued to the respondent demanding Service Tax amounting to Rs.45,97,548/ in terms of proviso to Section 73(1) of the Finance Act, 1994 along with due interest under Section 75 of the Act. Penalties were also proposed to be imposed upon the respondent under Section 77 & 78 of the Act. 2.3 The said show cause notice was adjudicated as per the Order-in-Original dated 20.06.2022 referred in para 1 above. 2.4 Aggrieved revenue have filed appeal before Commissioner (Appeals) vide the impugned order, Commissioner (Appeals) has modified the Order-in-Original. 2.5 Aggrieved appellant have filed this appeal. 3.1 I have heard Shri Prakhar Shukla learned Counsel appearing for the appellant and Shri Santosh Kumar learned Authorised Representative appearing for the revenue. 4.1 I have considered the impugned order along with the submissions made in appeal and during the course of argument. 4.2 Impugned order r....
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.... 75 of Finance Act, 1994. Equal penalty is also imposed under Section 78, but I refrain from imposing any other penalty under Section 77 of the Act in view of the fact that mandatory penalty has already been imposed." 4.3 Hon'ble Supreme Court has in the case of Krishi Upaj Mandi Samiti [2022 (58) G.S.T.L. 129 (S.C.)] observed as follows: "6. At the outset, it is required to be noted that the respective Market Committees are claiming exemption under the 2006 circular. The exemption circular issued by the Board reads as under:- Circular No. 89/7/2006, dated 18-12-2006 :- "A number of sovereign/public authorities (i.e., an agency constituted/set up by Government) perform certain functions/duties, which are statutory in nature. These functions are performed in terms of specific responsibility assigned to them under the law in force. For examples, the Regional Reference Standards Laboratories (RRSL) undertake verification, approval and calibration of weighing and measuring instruments; the Regional Transport Officer (RTO) issues fitness certificate to the vehicles; the Directorate of Boilers inspects and issues certificate for boilers; or Explosive Departm....
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....and is capable of determining a defined meaning. 8. The exemption notification should not be liberally construed and beneficiary must fall within the ambit of the exemption and fulfil the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise at all by implication. 8.1 It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. An exception and/or an exempting provision in a taxing statute should be construed strictly and it is not open to the Court to ignore the conditions prescribed in the relevant policy and the exemption notifications issued in that regard. 8.2 The exemption notification should be strictly construed and given a meaning according to legislative intendment. The Statutory provisions providing for exemption have to be interpreted in light of the words employed in them and there cannot be any addition or subtraction from the statutory provisions. 8.3 As per the law laid down by this Court in a catena of decisions, in a taxi....
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....ted is not deposited into the Government Treasury. It will go to the Market Committee Fund and will be used by the market committee(s). In the facts of the case on hand, such a fee collected cannot have the characteristics of the statutory levy/statutory fee. Thus, under the Act, 1961, it cannot be said to be a mandatory statutory obligation of the Market Committees to provide shop/land/platform on rent/lease. If the statute mandates that the Market Committees have to provide the land/shop/platform/space on rent/lease then and then only it can be said to be a mandatory statutory obligation otherwise it is only a discretionary function under the statute. If it is discretionary function, then, it cannot be said to be a mandatory statutory obligation/statutory activity. Hence, no exemption to pay service tax can be claimed. 10.The next provision relied upon by the appellants - respective Market Committees is Rule 45 of the Rajasthan Agricultural Produce Markets Rules, 1963 (hereinafter referred to as "Rules, 1963"), which reads as under :- The Market Committee "45. fund. - All money received by the Market Committee shall be credited to the fund called the Market Comm....
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....7-2012, such activity by the Market Committees is put in the Negative List, it can safely be said that under the 2006 circular, the Market 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." 4.4 This decision has been followed by Hon'ble Supreme Court and High Court across country, making distinction between the statutory functions and non statutory functions to determine the leviability of service tax on these statutory bodies. Some of these decision are listed below: ⮚ Agriculture Produce Marketing Committee Gazipur [2023 (2) CEN 293 (SC)] ⮚ Gujarat Industrial Development Corporation [2023 (5) CEN 171 (SC)] ⮚ Tata Power Delhi Distribution Ltd. [2024 (17) CEN 155 (DEL)] 4.5 From the above decisions it is qui....
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.... if yes, to enclose a copy of the notification along with the affidavit and also to clear the date of effect of the said notification. 2. That the Service Tax is a self assessed tax and the assessee must claim the exemption citing the benefit claimed by him. In the present case, M/s BSES Rajdhani Power Ltd or Tata Power Delhi Distribution Ltd. are service providers under Management, maintenance or repair service: in respect of maintenance of Street lights in the area of Municipal Corporation (MCD) of Delhi. The following are the exemption provisions which may be applied:- S. No. Notification Provision of service Tax Opinion of TRU-II 1 Notification No. 24/2009 dated 27-72009 Exempts the taxable service, referred to in sub-clause (zzg) of clause (105) of section 65 of the Finance Act, 1994, provided to any person by any other person in relation to management, maintenance or repair of roads from the whole of the service tax leviable thereon under section 66 of the said Finance Act. Not applicable as service by way of maintenance of street lights provided to a local authority is not a service in relation to management maintenance or repair of roa....
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.... tax. 9.2 In other words, service tax was leviable on maintenance of street lights, contrary to the stand taken by respondent no. 1/MCD. 10. Interestingly, respondent no. 1/MCD had also sought a clarification from the Central Board of Excise and Customs, as to whether the exemption from service tax was available, vis-à-vis maintenance of street lights. The clarification sought, however, did not reap beneficial results for respondent no. 1/MCD. The same is evident upon a perusal of the following extract taken from the affidavit filed by respondent no. 1/MCD: " ** ** ** 2. That the present affidavit is being filed in pursuance of the order(s) dated 19-8-2011 and 17-1-2012 passed by this Hon'ble Court. It is submitted that as stated in para-No. 44 of, the counter affidavit, the MCD had not applied to the Central Govt. after the rejection order. However, it is submitted that vide letter No. 9095/CA-CUM-FA/2012 dated 16-1-2012, which came to the knowledge of the deponent afterwards than 17-1-2012, through CA-Cum-FA, MCD, the Respondent side gave the said letter/application for exemption of service tax on maintenance of street lights with th....
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....tion from levy of tax. The aphorism that "tax knows no equity", generally holds good. There is no reason why it should not apply in this case as well. 12.2 This contention of Mr Gautam, thus, cannot be accepted. 13. Therefore, insofar as the first issue, as noted in paragraph 1 above, is concerned, it has to be decided in favour of the petitioners, which is that, during the relevant period, there was no exemption available from the payment of service tax, concerning the maintenance of street lights. 14. Insofar as the second issue is concerned, it can be decided based on an admitted fact, which is, that the petitioners have paid service tax, during the relevant period. The logical sequitur would be that the petitioners would have to be reimbursed the service tax that they have paid, since the recipient would have to bear the ultimate burden of the payments in that behalf." 4.6 Thus in view of the decisions as above, the services provided to the statutory authorities or government authorities will not be exempt from payment of service tax, till it can be shown that the services provide are strictly falling within the purview of exemption notification. A....
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....o carry out any function entrusted to a municipality under article 243W of the Constitution;'" From the perusal of the above definition, it is evident that to be called a "government authority", ⮚ the authority should have been set up by an act of parliament or a state legislature or established Government; ⮚ have 90% or more equity participation or control; and ⮚ should be established to carry out any function entrusted to municipality under article 243 W of Constitution. 4.9 Article 243 W of Constitution is reproduced below: 243W. Powers, authority and responsibilities of Municipalities, etc.-Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow- (a) the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to- (i) the preparation of plans for economic development and social justice; (ii) the performanc....
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....61) E.L.T. 577 (S.C.)] Hon'ble Supreme Court has observed as follows: 52. To sum up, we answer the reference holding as under - (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export case (supra) stands overruled. 4.11 In view of discussions as above I do not find any merits in submissions made by the appellant claiming exemption under S No 12 (e) of the Notification No 25/2012-ST. 4.12 I also observe that exemption under S No 13 (a) is applicable only in respect of roads meant for use by general public. Impugned order specifically records the finding that the work of roads undertaken by the appellant is not in respect of roads meant for use b....