2022 (1) TMI 508 - AT - Service Tax

Levy of service tax - collection of toll - Business Auxiliary Service (BAS) or not - appellant was acting as an intermediary and was instrumental in the collection of toll from the vehicles - HELD THAT - Learned coordinate Mumbai Bench in the case of COMMISSIONER OF SERVICE TAX, MUMBAI VERSUS M/S. IDEAL ROAD BUILDERS PVT. LTD., M/S. MEP TOLL ROAD PVT. LTD. 2017 (10) TMI 401 - CESTAT MUMBAI where it was held that The toll collection is their own income and is not parted with NHAI/MSRDC as they are concerned only with the bid amount finalized in auction and therefore cannot be termed as activity of Business Auxiliary Service. The Civil Appeal admitted by the Hon ble Apex Court against the above order of the Mumbai Bench was subsequently withdrawn by the Revenue. The assertions of the learned advocate to be acceptable that the issue is no more res integra and covered in its favour since same was not distinguished nor any order to the contrary are furnished by the Revenue - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of toll collection activity under Business Auxiliary Service (BAS) for service tax liability.

Analysis:
1. The appellant entered into an agreement with a subsidiary of National Highways Authority of India (NHAI) for toll collection. The Revenue issued a show-cause notice proposing service tax liability under BAS. The Commissioner confirmed the demand, leading to the present appeal.

2. The appellant argued against the service tax liability, citing judicial precedents such as Ideal Road Builders Pvt. Ltd. and others. The appellant contended that the toll collection did not constitute BAS and relied on Circular No. 152/3/2012-ST to support the argument that the subsidiary was not an agent of NHAI.

3. The Tribunal reviewed the case, including the agreements and relevant laws. Referring to the Ideal Road Builders Pvt. Ltd. case, the Tribunal noted that the toll collection was not on a commission basis but a lump-sum payment to NHAI, making it the appellant's business income. The Tribunal found that the toll collection did not qualify as BAS and was not subject to service tax.

4. The Tribunal also highlighted the withdrawal of a Civil Appeal by the Revenue against the Mumbai Bench's decision, supporting the appellant's position. In another case, the New Delhi Bench ruled in favor of the appellants for a similar issue post-2012, further strengthening the appellant's argument.

5. Based on the precedents and the lack of contrary evidence from the Revenue, the Tribunal accepted the appellant's contentions. Consequently, the demand and the Commissioner's order were set aside, and the appeal was allowed with any consequential benefits as per law.

This comprehensive analysis of the judgment outlines the key legal arguments, precedents, and the Tribunal's decision regarding the classification of toll collection activities under BAS for service tax liability.