2017 (5) TMI 700 - AT - Service Tax

Taxability - development charges - street light charges - road cutting charges - N/N. 24/2009-ST dated 27.07.2009 - Held that - for the period prior to 27.07.2009 and for the period post 16.06.2005, no service tax can be levied and collected for the services provided in relation to management, maintenance or repair of roads. It is also made clear that N/N. 24/2009-ST dated 27.07.2009 exempts from service tax the services covered under the category of management, maintenance or repair of roads w.e.f. 27.07.2009. Therefore, the amount collected for the services concerning as road cutting charges by the appellant will not attract any service tax for the period invoked in both the appeal cases filed by the appellant. Development charges and street light charges collected on account of these services by the appellant there cannot be any exemption and service tax is to be levied under the head of management, maintenance or repair service - For quantifying the service tax in case of development charges and street light charges to be collected under the service of management, maintenance and repair services, the case is remanded to the Original Authority, who will decide the matter afresh. Appeal disposed off - part matter allowed and part matter on remand.

Summary

Issues:
1. Appeal against Commissioner's order confirming demand for development charges, street light charges, and road cutting charges.
2. Appeal against Order-in-Original confirming demand for a different period.
3. Exclusion of service tax on road cutting charges under Notification No. 24/2009-ST.
4. Verification exercise for development charges and street light charges already subjected to service tax.
5. Remand for quantifying service tax on development charges and street light charges.
6. Confirmation of service tax demand for one year only, dropping penalty for extended period.

Analysis:
1. The appellant appealed against the Commissioner's order confirming a demand of ?1,93,40,637/- for development charges, street light charges, and road cutting charges for the period from 16.05.2005 to 31.03.2010. Another appeal (No.59994/2013) by the same appellant was against a demand of ?73,08,224/- for the period from 01.04.2010 to 30.09.2011. The appellant argued that service tax on road cutting charges should be excluded under Notification No. 24/2009-ST dated 27.07.2009.

2. The appellant contended that no service tax should be levied on road cutting charges for the relevant periods as per the notification and Section 97 of the Finance Act, 1994. However, for development charges and street light charges, the appellant acknowledged the need for service tax. They claimed to have already paid service tax on some development charges under lease rent, requiring a verification exercise to avoid double taxation.

3. The Tribunal remanded the case to the Original Authority for quantifying service tax on development charges and street light charges. The Authority was instructed to conduct a thorough verification, considering amounts where service tax was already paid under lease rent. Following a previous CESTAT decision, the service tax demand for development charges and street light charges was confirmed for one year only, dropping the penalty for the extended period.

4. The judgment allowed both appeals by way of remand, directing the Original Authority to reevaluate the matter after verification and providing a personal hearing to the appellant. The confirmation of service tax demand for only one year, along with the dropping of penalty for the extended period, was highlighted as the final decision in the case.