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2014 (2) TMI 1001 - HC - Service TaxLevy of service tax on parking charges - Management of cars/scooter parking facilities at Indira Gandhi International Airport, New Delhi - Imposition of penalty u/s 76, 77 and 78 - - Held that - Explanation makes it clear beyond any doubt, that Parliament had intended that renting or immovable property was to be taxed, for the first time, from 1st June, 2007. Its intention that parking was to fall within the expression renting of immovable property - again with effect from 01.06.2007, is also clear from Section 65 (90a). Yet, the definition of taxable service, while introducing Section 65 (105) (zzzz) specifically excluded parking services. Now, parking services regardless of wherever it is carried on - stand excluded in entirety. Therefore, it is not open now for the revenue to argue that it falls within the expression airport service under Section 65 (105) (zzm). Parliament would have manifested its intention to bring to tax a part of the activity, carried out in airport premises, if it wished, in more express and clearer terms - Following decision of M/s. Flemingo Duty Shops Pvt. Ltd v Union of India and Ors. 2013 (1) TMI 523 - DELHI HIGH COURT . So far as the revenue s argument that the issue cannot be gone into, because the assessee did not dispute the basic liability is concerned, this Court is of the opinion that a concession, if made on an erroneous understanding of the law; at any rate without the sanction of law to collect the amounts demanded, the revenue cannot rely upon the technicality of a concession of law. - Decided in favour of assessee.
Issues Involved:
1. Liability of the appellant to pay service tax for the car parking business and its management. 2. The effective period for the appellant's liability to pay service tax. 3. Error by the Tribunal in directing the appellant to pay a penalty. Detailed Analysis: 1. Liability to Pay Service Tax for Car Parking Business and Its Management: The appellant was engaged in managing car/scooter parking facilities at Indira Gandhi International Airport, New Delhi, and Jaipur through agreements with Airports Authority of India (AAI). The Service Tax authorities deemed these activities taxable under "Airport Service" as defined in Section 65 (105) (zzm) of the Finance Act, effective from 10.09.2004. A Show Cause Notice was issued on 24.12.2007, demanding Service Tax of Rs. 1,93,55,142/- along with interest and proposing penalties under Sections 76, 77, and 78 of the Finance Act. The Commissioner confirmed the tax demand but did not impose penalties. The Tribunal upheld the tax demand, stating that the appellant failed to file service tax returns and pay liabilities, thus indulging in willful suppression of material facts, and directed the imposition of penalties. 2. Effective Period for Service Tax Liability: The appellant argued that parking could not be considered a taxable service under Section 65 of the Finance Act, 1994, referencing the decision in M/s. Flemingo Duty Shops Pvt. Ltd v Union of India and Ors. 2012 (28) STR 449, which clarified that parking was not a taxable service. The introduction of Section 65 (98a) and Explanation 1 (c) to Section 65 (105) (zzzz) from 01.06.2007 reinforced this stance, indicating that parking was never intended to be a taxable service. The Court held that parking services at airports were not taxable from 10.09.2004 to 01.06.2007, as supported by the precedent in Flemingo and the Central Board of Custom and Excise Circular No. 80/10/2004 dated 10.09.2004, which excluded rental/lease charges from service tax. 3. Tribunal's Error in Imposing Penalty: The Tribunal's decision to impose penalties was based on the appellant's alleged willful suppression of material facts. However, the Court found that the revenue's attempt to tax parking for the period before 01.06.2007 was untenable. The Court emphasized that renting immovable property became taxable from 01.06.2007, and parking was explicitly excluded from taxable services. Therefore, the revenue's argument that parking services fell under "airport service" was rejected. The Court noted that a concession made on an erroneous understanding of the law could not justify the revenue's demand and penalties. Conclusion: The Court allowed the appeals, setting aside the demands and penalties imposed on the appellant. The judgment clarified that parking services at airports were not taxable before 01.06.2007, aligning with the legislative intent and previous judicial decisions.
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