2023 (7) TMI 363 - AT - Service Tax

Classification of services - Support Services of Business and Commerce or not - Adda Fees/ bus stand fee - management and maintenance of non-commercial Government business - time limitation - penalty - HELD THAT - It is evident from the records of the case that the appellants are paying service tax on account of selling space for advertisement purposes on the premises of the bus stand as well as on the buses. The appellants have paid the amount of Rs.27,25,073/-(for the period 01.05.2006 to 30.06.2008) and Rs.6,86,145/- (for the period May 2009 to June 2010) on being pointed out for provision of space for advertisement. The dispute is in relation to the Adda Fees collected by the undertaking - collection of Adda Fee cannot be equated to Business Support Service as they are discharging their functions as a statutory authority rather than promoting the business of bus operators - the demand on this count cannot be sustained. However, the appellants are already discharging the service tax on space rented out for advertisement. Time Limitation - Penalties - HELD THAT - Whereas the demands are relatable to the period 01.05.2006 to 30.06.2008. Show cause notice has been issued on 21.01.2010, clearly beyond the limitation. On this count too, major portion of the demand raised in the show cause notice cannot be upheld. More so, penalties imposed cannot be sustained. Appeal allowed.

Summary

Issues:
The issues involved in the judgment are the classification of Adda Fees/bus stand fee under "Support Services of Business and Commerce", levy of service tax on management and maintenance of non-commercial Government business, exclusion of parking spaces from the levy of service tax, invocation of extended period and imposition of penalty on a Government undertaking.

Classification of Adda Fees:
The appellants contended that Adda Fees collected for bus stands are statutory levies for maintenance, not for supporting bus operators' business. They relied on legal precedents to argue that such fees by sovereign authorities are compulsory levies, not taxable services. The tribunal agreed, stating that the collection of Adda Fees does not constitute "Business Support Service" as the appellants are fulfilling statutory functions, not promoting business. The demand for service tax on Adda Fees was dismissed.

Levy of Service Tax on Government Business:
The appellant argued that service tax cannot be levied on non-commercial Government activities, citing circulars and legal cases. They emphasized that government constructions are typically not taxable and that fees collected by sovereign authorities for statutory activities are not taxable services. The tribunal concurred, stating that the demand for service tax on the management of bus stands by a Government undertaking was not sustainable.

Exclusion of Parking Spaces from Service Tax:
The appellant pointed out that parking spaces are excluded from the levy of service tax as per legal provisions. They cited a case to support their argument. The tribunal did not specifically address this issue in the judgment.

Invocation of Extended Period and Penalty on Government Undertaking:
The appellant contended that as a Government undertaking, there should be no invocation of the extended period or imposition of penalties. They cited various legal precedents to support their position. The tribunal accepted this argument, noting that the demands were time-barred and penalties could not be sustained. The appeal was allowed in favor of the appellant.

*(Separate Judgment by Judges: Not Applicable)*