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2022 (2) TMI 956 - AT - Service TaxLev of service tax - Maintenance, Management or repair Service - maintenance and repair of streets, street lights, water supply, drainage etc. - collection from the lessees of the plots, an annual fee for providing such services, calling it as service charge - HELD THAT - Hon ble Bombay High Court has considered the issue in the case of the appellant COMMISSIONER OF CENTRAL EXCISE, NASHIK VERSUS MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION 2018 (2) TMI 1498 - BOMBAY HIGH COURT has held that MIDC is a statutory Corporation which is virtually a wing of the State Government. It discharges several sovereign functions - the Revenue ought not to have compelled MIDC to prefer Appeals before Appellate Tribunal - The said order of Hon ble Bombay High Court has been accepted by the Board as per letter F No. 276/203/2017-CX.8A dated 15.02.2018. Since the issue is squarely covered in favour of the appellant in their own case, the impugned order cannot be sustained - appeal allowed - decided in favor of appellant.
Issues:
Service Tax demand classification under "Renting of Immovable Property" for maintenance services provided by a corporation. Analysis: The appeal challenged an Order-in-Original confirming a Service Tax demand of ?5,36,31,86,244 along with penalties, for services rendered by the appellant under the category of "Renting of Immovable Property" from 1.6.2007 to 31.03.2012. The Revenue contended that the appellant, a corporation, provided maintenance, management, and repair services for which Service Tax was leviable under the category of "Maintenance, Management or Repair Service." The appellant argued that previous decisions by the Tribunal and the Bombay High Court favored their position. They highlighted circulars emphasizing that activities by public authorities fulfilling statutory obligations do not constitute taxable services. The appellant's functions, as per the MID Act, included establishing and managing industrial estates, providing amenities, and statutory obligations like maintenance and repairs. The Bombay High Court's judgment noted that the appellant's activities were in line with statutory obligations, and the service charges collected were compulsory levies used to fulfill these obligations. The judgment emphasized that the appellant, a statutory corporation, acted as a wing of the State Government, discharging sovereign functions. The Apex Court's rulings on similar corporations supported this view. The appellant's obligations to provide and maintain amenities were part of their statutory functions under the MID Act. The service charges collected were deemed compulsory levies for discharging statutory obligations, as per the circular dated 18th December 2006. The judgment concluded that the demand for Service Tax was based on activities integral to the appellant's statutory obligations, and no substantial question of law arose. The Tribunal found no error in the view taken by the Appellate Tribunal and allowed the appeal, noting that the issue was squarely covered in favor of the appellant by previous judgments. The Board accepted the Bombay High Court's order, and the appeal was allowed, highlighting that the Revenue should not have compelled the appellant to litigate, incurring unnecessary expenses. In conclusion, the Tribunal's decision favored the appellant, emphasizing that the demand for Service Tax was based on activities integral to their statutory obligations, and the appeal was allowed based on previous favorable judgments and statutory obligations fulfilled by the appellant.
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