AI OCR 
TaxTMI 
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2026 (4) TMI 1829
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....s ORDER S. S. GARG : These 15 appeals are directed against a common impugned Order-in-Original No. 1-21/ST/COMMR/VMJ/RTK/2021-22 dated 25.06.2021 passed by the Commissioner of Central GST, Rohtak who was appointed by the Additional Director General, GST Intelligence, Gurugram vide Order No. 07/2020-21 dated 10.02.2021. Vide the impugned order, the learned Commissioner has confirmed the demand of service tax along with interest and penalties. Details of service tax demanded and penalty imposed in respect of each appellant are given herein below in tabular form: S. No. Appeal No. Name of Appellant Demand of Service Tax (Rs) Penalty (Rs) 1. ST/60529/2021 DITS, Gurugram 2,25,55,027 2,25,55,027 + 10,000 2. ST/60437/2021 DITS, Charkhi Dadri 1,81,839 1,81,839 + 10,000 3. ST/60456/2021 DITS, Kurukshetra 1,22,51,815 1,22,51,815 + 10,000 4. ST/60489/2021 DITS, Panipat 94,70,378 94,70,378 + 10,000 5. ST/60517/2021 DITS, Kaithal 85,56,550 85,56,550 + 10,000 6. ST/60067/2022 DITS, Rohtak 1,21,42,785 1,21,42,785 + 10,000 ....
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....t calling for the required information/documents. In response to the said letters and summons, the appellant vide various letters furnished the required information/documents and explained that the various services are provided to facilitate the citizens/public and the services include services like issuance of certificates/licences on the direction of Government of Haryana; the services are in the nature of services provided by Government or Local Authority as a sovereign function; the services are provided at the behest of the Government to the public/citizens and not to any business entity; the services are exempted from service tax. It was also explained that the appellant is a Government agency/society and the services are provided as a Government agency/society to the public and such services provided by the appellant are exempt from payment of service tax. 2.2 On the basis of information/documents provided by the appellant, the Department issued a show cause notice dated 29.06.2020 to the appellant as to why the service tax amounting to Rs.2,58,12,072/- should not be demanded and recovered under proviso to Section 73(1) of the Finance Act, 1994 read with Section 174 of th....
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....and the fee collected by the appellant is government-prescribed statutory charges and not commercial consideration. He further submits that there is no profit motive, and surpluses cannot be distributed among members, and they can only be used for public purposes as per byelaws. He also submits that the Finance Act, 1994 does not define "business". He further submits that the DITS merely facilitates statutory functions on behalf on the government and the activities lack profit motive and are sovereign/state functions and they cannot constitute business under Service Tax law. For this, he relies on the judgment of Hon'ble Apex Court in the case of Narain Swadeshi Mills vs. Commissioner of Excess Profits Tax [AIR 1955 SC 176] wherein the Hon'ble Apex Court explained the expression "business" by holding that "Business connotes some real, substantial and systematic or organized course of activity or conduct with a set purpose". 4.2 The learned Counsel further submits that the activities carried out by the appellant do not come under the purview of 'service' more particularly in terms of Section 65B(44) of Finance Act, 1994. He also submits that 'service' means any activity carri....
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....3] 4.7 The learned Counsel further submits that the amount collected by the appellant is a statutory fee and not contractual consideration. He further submits that mere nomenclature or name of the service alone is not sufficient to determine the taxability of the service. He also submits that in the negative list regime, when all the services except those which have been mentioned in the negative list or otherwise covered by an exemption notification, are taxable, then one cannot go by the mere name or nomenclature of the service; and the nature of the transaction has to be ascertained to see whether a particular activity is taxable or not and it is also a settled principle of law that the nomenclature alone would not determine the nature of transaction. In this regard, he places reliance on the following decisions: * Moped India Ltd [1986 (23) ELT 8 (SC)] * Bhopal Sugar Industries Ltd vs. Sales Tax Officer, Bhopal [(1977) SCC (3) 147] 4.8 The learned Counsel further submits that activities rendered by the appellant are exempted under various clauses of the Notification No. 25/2012-ST dated 20.06.2012. He further submits that the activities of the appellant ....
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....held that where the dispute is interpretational, extended period cannot be invoked: * CCE vs. Champher Drugs & Liniments [1989 (40) ELT 276 (SC)] * Padmini Products vs. Collector [1989 (43) ELT 195 (SC)] * Pushpam Pharmaceuticals vs. CCE [1995 (78) ELT 401 (SC)] * Anand Nishikawa Co. Ltd vs. CCE, Meerut [2005 (188) ELT 149 (SC)] * Continental Foundation Jt. Venture vs. CCE, Chandigarh [2007 (216) ELT 177 (SC)] He submits that in the above-cited judgments, it has also been consistently held by the Apex Court that something positive other than mere inaction or non-payment of duty is required for invoking extended period and that suppression means failure to disclose full information with intent to evade the payment of duty and mere omission to give certain information is not suppression of fact unless it is deliberate with intention to evade the payment of duty. 4.12 The learned Counsel further submits that the appellant was under a bona fide belief and understanding that being a governmental authority, performing municipal functions, its services were exempt and hence no service tax registration was necessary. He refers to the judgm....
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....014-ST dated 30.01.2014. He also refers to the main objectives of DITS as provided under the memorandum of association of DITS and submits that considering the nature of functions performed by the DITS, they do not fall within the definition of 'governmental authority'. He further submits that DITS is neither 'governmental authority' nor 'local authority' and therefore, the appellants are not entitled to claim benefits under Section 66D of the Finance Act or Notification No. 25/2012-ST. 6.2 To justify the invocation of extended period of limitation, the learned Authorized Representative submits that even after the issue of clarification by the department vide Circular No. 192/02/2016-ST dated 13.04.2016 and the accompanying press note, the appellants chose not to take any corrective action, therefore, extended period of limitation has rightly been invoked by the learned Commissioner to confirm the demand. He also submits that the belief of the appellants that their activities were not taxable, is not supported by any reasonable interpretation of law. In support of his submission, he relies on the following decisions: ▪ Nicholas Piramal India vs. CCE [2010 (260) EL....
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....n; or g) a regional council constituted under article 371A of the Constitution" As per 3(31) of General Clauses Act, 1897, the definition of "Local Authority" is as under: - "Local Authority" shall mean a municipal committee, district board, body of port commissioners or other authority legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund" Definition of "Governmental Authority": (1) As per clause 2(s) of Notin No. 25/2012-ST dated 20.06.2012, "governmental authority" means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W of the Constitution; (2) Vide Notfn No. 02/2014-ST dated 30.01.2014, the definition of "governmental authority" has been amended and the amended definition is as under: - "Governmental authority" means an authority or a board or any other body; (i) set up by an Act of Parliament or a State Legislature; or (ii) establ....
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....pecifically drafted for government authority which exempt the services provided by the governmental authority which may not be directly functioning as municipality or panchayat, but are providing services in relation to any of the functions entrusted to municipalities or panchayats through Article 243W/243G respectively. 12. We also note that Notification No. 25/2012-ST issued under Section 93(1) of the Finance Act, 1994, contains several entries explicitly designed to cover services rendered by the 'governmental authorities' in connection with constitutional functions of local bodies. Relevant particulars are as under: Entry 39: "Services by a Governmental Authority by way of any activity in relation to any function entrusted to a Municipality under Article 243W of the Constitution"; and Entry 60: "Services by Government, a local authority or a Governmental Authority by way of any activity in relation to any function entrusted to a Panchayat under Article 243G of the Constitution." We note that the legislative intent behind these entries was to extend exemption not only to municipalities and panchayats but also to statutory bodies, societies and agencies cr....
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....ing agency of the government, and are not a commercial service provider. Consequently, denial of exemption under Notification No. 25/2012-ST to the appellants, is not legally sustainable. 16. Further, we find that identical issue was considered by various benches of the Tribunal. In this regard, we may refer to the decision of Bangalore Bench of the Tribunal in the case of United Telecoms Ltd (supra), wherein the Tribunal after considering the various judgments of the High Courts/Supreme Court and the clarification issued by the CBEC vide Circular No. 89/7/2006-ST dated 18.12.2006, has held as under: "5. Heard both sides and perused the records of the case. We find that C.B.E.C. by the Circular cited above has clarified as under: "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 ....
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....on a particular kind of service cannot be struck down on the ground that it does not conform to a common understanding of the word 'service' as long as it does not transgress any specific restriction embodies in the Constitution. (iv) Service tax is a levy on the event of service. (v) The concept of service tax is an economic concept. (vi) 'Consumption of service' as in case of 'consumption of goods' satisfies human needs. (vii) Service tax is a value added tax which in turn is a general tax applicable to all commercial activities involving provision of service. (viii) Value added tax is a general tax as well as destination based consumption tax leviable on services provided within the country. (ix) The principle of equivalence is in-built into the concept of service tax. (x) The activity undertaken in a transaction can have two components, namely, activity undertaken by a person pertaining to his performance and skill and secondly the person who avails the benefit of the said performance and skill. In the said context, the two concepts namely activity and the service provider and service recipient gain significance. ....
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....e services provided? Activities assigned to any performed by the sovereign/public authorities under the provisions of any law are statutory duties. The fee or amount collected as per the provisions of the relevant statute for performing such functions is in the nature of a compulsory levy and are deposited into the Government account. Such activities are purely in public interest and are undertaken as mandatory and statutory functions. These are not to be treated as services provided for a consideration. Therefore, such activities assigned to and performed by a sovereign/public authority under the provisions of any law, do not constitute taxable services. Any amount/ fee collected in such cases are not to be treated as consideration for the purpose of levy of service tax. However, if a sovereign/public authority provides a service, which is not in the nature of statutory activity and the same is undertaken for a consideration (not a statutory fee), then in such cases, service tax would be leviable as long as the activity undertaken falls within the scope of a taxable service as defined. The Commissioner in the impugned order has taken the view that 'provision of s....