2018 (6) TMI 1528 - AT - Service Tax

Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality - occupation and use of any stall, shop or slaughter house or for a right to slaughter animals in any corporation s slaughter house - scope of exemption N/N. 25/2012-ST dated 20.06.2012 - Held that - As against the finding of the Appellate Authority, which are unambiguous and passed on the basis of various provisions of Constitution, Revenue has not given any reasonable ground to interfere in the said order - Inasmuch as, admittedly, the respondent were doing the statutory activity, there is no reason to interfere in the order of Appellate Authority - appeal dismissed - decided against Revenue.

Summary

Issues: Interpretation of exemption under Notification No. 25/2012-ST for services provided by a municipal corporation under Article 243 W of the Constitution.

In this judgment by the Appellate Tribunal CESTAT ALLAHABAD, the issue at hand was the interpretation of the exemption under Notification No. 25/2012-ST for services provided by a municipal corporation under Article 243 W of the Constitution. The Commissioner (Appeals) had ruled in favor of the respondent, stating that the activity in question was exempt from service tax as it fell within the duties authorized by Section 422 (f) of the Uttar Pradesh Municipal Corporation Act, 1959. This section allowed the municipal corporation to charge for the occupation and use of stalls, shops, slaughterhouses, or the right to slaughter animals. The Commissioner (Appeals) also highlighted that the functions entrusted to municipalities under Article 243 W of the Constitution included the regulation of slaughterhouses and tanneries. Therefore, the impugned activity was deemed exempt from service tax under the relevant notification. The Appellate Authority upheld this decision, noting that the Revenue had not provided any reasonable grounds to interfere with the order. The Tribunal found no justification to overturn the ruling, as the respondent was engaged in a statutory activity. As a result, the appeal filed by the Revenue was rejected, and the stay petition was disposed of accordingly.

This judgment underscores the importance of a thorough analysis of statutory provisions and constitutional mandates when determining the applicability of exemptions under service tax notifications. The Tribunal emphasized the need for a clear connection between the activities being carried out by a municipal corporation and the functions entrusted to it under the Constitution. By referencing specific sections of the Uttar Pradesh Municipal Corporation Act, 1959, and Article 243 W of the Constitution, the Commissioner (Appeals) and the Appellate Authority were able to establish a strong legal basis for exempting the respondent's activities from service tax. The decision highlights the significance of legal clarity and adherence to constitutional provisions in interpreting tax exemptions for governmental authorities providing essential services at the local level.