2018 (7) TMI 1788 - AT - Service Tax

Business Auxiliary Service - collection of toll / fee - amount retained by them as commission over and above the actual payment made to NHAI - Held that - The issue stands covered by the decision of the Tribunal in the case of M/s Ideal Road Builders Pvt. Ltd. Vs Commissioner of Service Tax, Mumbai 2015 (8) TMI 592 - CESTAT MUMBAI wherein in identical circumstances, it was held that no service tax is payable on the commission on the amount collected as toll for the services rendered at Toll Collection Center - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Service tax liability on toll collection charges retained as commission by the appellant.

Analysis:
The appellant was engaged in providing toll charges collection services to NHAI at a specific Toll Plaza. An audit revealed that they retained a certain amount as commission over and above the actual payment made to NHAI, leading to a demand for Service Tax of ?3,84,586 under Section 73(1) of the Finance Act, 1994, along with applicable interest and penalties under Sections 75, 77, and 78 of the same Act. The adjudicating authority confirmed this demand, which was further upheld by the Commissioner (Appeals), prompting the appellant to file the present appeal.

Upon review, the Tribunal found that the issue was previously addressed in the case of M/s Ideal Road Builders Pvt. Ltd. Vs Commissioner of Service Tax, Mumbai, where it was held that no service tax is payable on the commission retained from toll collection services. This decision was based on earlier rulings by the Tribunal in similar cases, establishing a precedent that the commission on toll collection does not attract service tax. Citing cases like CST Vs Intertoll ICS CE Cons O & M.P. Ltd., M/s PNC Construction Co. Ltd. Vs CCE, and M/s Patel Infrastructure Pvt. Ltd. Vs CCE, the Tribunal concluded that the appellant was not liable to pay service tax on the commission received for toll collection services. Consequently, the appeal was allowed, granting relief to the appellant from the disputed tax liability and associated penalties.

This judgment clarifies the tax treatment of commissions retained by service providers in toll collection scenarios, aligning with established precedents and principles governing service tax liability in such cases. The decision underscores the importance of consistency in interpreting tax laws and upholding precedents to ensure fair and equitable application of tax regulations in similar factual circumstances.