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2022 (5) TMI 1304 - AT - Service TaxLevy of service tax - Management Maintenance or Repair Service - 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 IN COMMISSIONER OF CENTRAL EXCISE NASHIK VERSUS MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION 2018 (2) TMI 1498 - BOMBAY HIGH COURT has considered the issue in the case of the appellant where it was 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 orders cannot be sustained - appeal allowed.
Issues Involved:
1. Liability to pay service tax on 'Management, Maintenance or Repair Service' provided by a statutory corporation. 2. Interpretation of statutory obligations and compulsory levies under the provisions of law. 3. Applicability of service tax on services performed by sovereign/public authorities. Detailed Analysis: 1. Liability to Pay Service Tax on 'Management, Maintenance or Repair Service': The appellant, a statutory corporation, provided 'Management, Maintenance or Repair Service' by maintaining streets, street lights, water supply, drainage, etc., and collected an annual fee termed as 'service charge' from lessees. The Revenue contended that the appellant was liable to pay service tax on these services under the category of 'Maintenance, Management or Repair Service'. However, the appellant argued that the issue had already been settled in their favor by previous decisions of the Tribunal and the Bombay High Court, which ruled that such activities performed by a statutory corporation do not constitute taxable services. 2. Interpretation of Statutory Obligations and Compulsory Levies: The Bombay High Court, in its decision, referenced a circular dated 18th December 2006, which clarified that activities performed by sovereign/public authorities under statutory obligations, with fees collected as compulsory levies deposited into the Government Treasury, do not constitute taxable services. The Court emphasized that these activities are purely in public interest and are not services provided to any particular individual for consideration. Therefore, no service tax is leviable on such activities unless the service is not statutory and the fee is not a statutory levy. 3. Applicability of Service Tax on Services Performed by Sovereign/Public Authorities: The Court examined the functions of the statutory corporation under the relevant Act, which included establishing and managing industrial estates and providing amenities such as roads, water supply, street lighting, and drainage. These functions were deemed statutory obligations. The Court noted that the service charges collected were in the nature of compulsory levies used to discharge these statutory obligations. Consequently, the Court ruled that such activities performed by the statutory corporation are not subject to service tax. The Court also highlighted that the statutory corporation acts as a wing of the State Government and performs several sovereign functions, further supporting the non-applicability of service tax. Conclusion: The Tribunal concluded that the issue was squarely covered in favor of the appellant by the Bombay High Court's decision, which had been accepted by the Board. Therefore, the impugned orders demanding service tax from the appellant were not sustainable, and the appeals were allowed. The Tribunal emphasized that the statutory corporation's activities were part of its statutory functions and obligations, and the fees collected were compulsory levies, thus exempt from service tax. The judgment reinforced the principle that statutory functions performed by sovereign/public authorities, with fees collected as compulsory levies, do not constitute taxable services.
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