2023 (11) TMI 308 - AT - Service Tax

Levy of service tax - charges recovered by the appellant from the allottee in addition to the land premium - Administrative Charges Realized - Processing Fees - Transfer Fees - Supervision Charges - Works Income - Income from Ekamra Hat - Rent received from Industrial Estates - Interest received on plots - Interest received on sheds - Occupation Charges realized from Industrial Estates - Water Charges realized from Industrial Estate, Buildings and Tenants - Ground Rent Collection - Cess Collection - Maintenance Charges Realized - Infrastructure Maintenance Charges Realized - Interest receipts on Land (Duburi Steel Complex) - Contract Receipts (Construction) - penalties - HELD THAT - The appellant is a statutory Corporation established under IDCO Act, 1980 and discharging functions of acquisition of land and allotted the same as per the guidelines of the Act to the various Industrial Units on lease basis and charged certain amounts in lieu of this. Administrative Charges Realized - HELD THAT - The said charges have been collected by the appellants with reference to the acquisition of land as prescribed under IDCO Act, 1980. Therefore, the said Administrative Charges Realized by the appellants are statutory charges for allotment of plot, which does not cover under Real Estate Agency s Service . Accordingly, no service tax is payable on the said amount. Processing Fees - HELD THAT - The processing fee is collected from the land allotees for post-acquisition Allotment and consequential Transfer of property in their favour in Industrial Estate and Industrial area as per IDCO Act, 1980. Therefore, no service tax is payable one the said amount. Transfer Fees - HELD THAT - The said charges have collected in terms of Circular issued by IDCO on mutual transfer of lease hold interest in IDCO allotted properties in Industrial Estate and Industrial Area on payment of processing fee and transfer fee and the same has been fixed by IDCO. The said services are in the statutory levy in nature, therefore, no service tax is payable by the appellants on the said charges. Supervision Charges - HELD THAT - The said Supervision Charges are required for Development of the Industrial Estate, which is statutory functions, which is to be discharged by the appellant. Accordingly, the same cannot be termed as Consulting Engineering Service , therefore, no service tax is payable by the appellants on the said Supervision Charges. Works Income - HELD THAT - The said activity has been hired by the appellants for testing of the soil of the industrial area, which were beneficiaries to the land allottees, which do not qualify as Technical Testing and Analysis Service . Therefore, on the said amount received by the appellant, the appellant is not liable to pay service tax. Income from Ekamra Hat - HELD THAT - The said activity does not qualify as Renting of Immovable Property Service. In that circumstances, no service tax can be demanded from the appellants under Renting Immovable Property Service, but service tax paid under Mandap Keeper Service by the appellant is correct and the same is payable by the appellants under Mandap Keeper Services. Rent received from Industrial Estates - HELD THAT - It is the contention of the appellant that this rent collected are to cover up the cost of repair, maintenance of Sheds, Plots in Industrial Estates, Capital Expenditure on Roads, Water and Engineering System as well as Electrical Installation under Section 17 of IDCO Act, 1980 - It is found that the same is statutory levy in terms of IDCO Act, 1980, therefore, no service tax is payable by the appellant on the said rent received by the appellant. Interest received on plots - Interest received on sheds - HELD THAT - The appellant has received the interest on delayed payment of dues of HP dues, Ground rent, cess, water charges and other payments from plot holders/share-holders. The said interest received is not related any service provided by the appellant. In that circumstances, the appellant is not liable to pay service tax. Occupation Charges realized from Industrial Estates - HELD THAT - These charges are the levy as occupied the land unauthorizedly, which cannot be terms as Renting Immovable Property, therefore, no service tax is payable by the appellant from the said services. Water Charges realized from Industrial Estate, Buildings and Tenants - HELD THAT - The appellant is collecting water charges in terms of Orissa Irrigation Act, 1959 and required for water supply to the Industrial Estate, Buildings and Tenants. These are the water charges. Therefore, it cannot be termed as Renting Immovable Property. Therefore, the said activity is not liable to service tax under Renting Immovable Property. Therefore, no service tax is payable on the appellant on the said services. Ground Rent Collection - Cess Collection - HELD THAT - The said collections are statutory levy, which the appellants collected from the allottees and transferred the same to the concerned officers, Revenue Department, Government of Orissa. Therefore, the said service cannot be said as Renting of Immovable Property and accordingly, no service tax is payable by the appellant on the said activity. Maintenance Charges Realized - HELD THAT - On payment by the appellant to the outsource agency and paid the service tax thereon, is also entitled for cenvat credit of service tax paid on hiring charges by the appellant. In that circumstances, the appellant is liable to pay service tax under the category of Maintenance and Repair Service on the maintenance charges recovered by the appellant. Infrastructure Maintenance Charges Realized - HELD THAT - The appellant is maintaining roads, electricity supply facilities and provided water supply system and repair maintenance of those assurances and also suffer from huge loss on the said account due to non-recovery of IMD from sick units and the said charges have been recovered by the appellant in terms of Section 17 of IDCO Act, 1980 as these are the statutory levy and the maintenance and repair etc. are not chargeable to service tax, which are the statutory functions provided by the appellant. Therefore, the said services do not qualify as maintenance and repair service. Accordingly, no service tax is payable by the appellant on the said charges. Interest receipts on Land (Duburi Steel Complex) - HELD THAT - The appellant allotted lands to Industries on payment land cost to be paid on instalments and in case default in payment of installments, interest is collected by the appellant from Duburi Steel Complex. The said interest collected for lease of land to the industries is not chargable to service tax under the category of Renting and Immovable Property and the same cannot be terms as Renting and Immovable Property. In that circumstances, no service tax is payable by the appellant on the said services. Contract Receipts (Construction) - HELD THAT - The appellant gets Work orders from Government/ Corporations for construction of Government/Corporation Buildings as per the direction of the Government and out of estimated amount, the appellant gets supervision charges @ 8% of the actual expenditure with additional incentive of 2% for timely compliance of the awarded work in accordance with the plan, design prepared by IDCO and accepted by Government Building including Government College Buildings as per Work procedure issued by Government of Odisha in OPWD, Works Department - The said activity of the appellant of works order, the appellant is paying service tax under Commercial and Industrial Construction Services and the same is liable as Commercial and Industrial Construction Service , therefore, the same amount is confirmed against the appellant. Thus, the appellant is liable to pay the service tax on income from Ekama Hat under heading Mandap Keeper Service , the charges under the category of Maintenance and Repair Service and contract receipts under the category of Commercial and Industrial Construction Service . Penalties - HELD THAT - No penalty is imposed on the appellants. Accordingly, the same is dropped. Appeal disposed off.

Summary

Issues Involved:

1. Administrative Charges Realized
2. Processing Fees
3. Transfer Fees
4. Supervision Charges
5. Works Income
6. Income from Ekamra Hat
7. Rent received from Industrial Estates
8. Interest received on plots and sheds
9. Occupation Charges realized from Industrial Estates
10. Water Charges realized from Industrial Estates, Buildings, and Tenants
11. Ground Rent and Cess Collection
12. Maintenance Charges Realized
13. Infrastructure Maintenance Charges Realized
14. Interest receipts on Land (Duburi Steel Complex)
15. Contract Receipts (Construction)

Summary:

(1) Administrative Charges Realized:
The Tribunal held that the administrative charges collected by the appellant in reference to the acquisition of land as prescribed under the IDCO Act, 1980, are statutory charges for allotment of plot and do not fall under "Real Estate Agency's Service." Hence, no service tax is payable on these charges.

(2) Processing Fees:
The processing fee collected from land allottees for post-acquisition allotment and transfer of property is not subject to service tax as it is a statutory charge under the IDCO Act, 1980.

(3) Transfer Fees:
Transfer fees collected for mutual transfer of leasehold interest in IDCO allotted properties are statutory levies and are not subject to service tax.

(4) Supervision Charges:
Supervision charges collected from government entities and local bodies are for reimbursement of office expenditures and are part of the statutory functions of IDCO. Therefore, these charges do not qualify as "Consulting Engineering Service" and are not liable for service tax.

(5) Works Income:
Charges for soil testing and equipment hire do not qualify as "Technical Testing and Analysis Service" and thus are not subject to service tax.

(6) Income from Ekamra Hat:
The rent received from shops and spaces inside Ekamra Hat is classified under "Mandap Keeper Service," for which the appellant is already paying service tax. This activity does not qualify as "Renting of Immovable Property Service."

(7) Rent received from Industrial Estates:
Rents collected from shops and plots in industrial estates are statutory levies under Section 17 of the IDCO Act, 1980, and are not subject to service tax.

(8) Interest received on plots and sheds:
Interest received on delayed payments is not related to any service provided by the appellant and thus is not subject to service tax.

(9) Occupation Charges realized from Industrial Estates:
Charges collected for unauthorized occupation of IDCO land do not qualify as "Renting Immovable Property" and are not subject to service tax.

(10) Water Charges realized from Industrial Estates, Buildings, and Tenants:
Water charges collected in terms of the Orissa Irrigation Act, 1959, are not subject to service tax as they do not qualify as "Renting Immovable Property."

(11) Ground Rent and Cess Collection:
Ground rent and cess collected as statutory levies under the IDCO Act, 1980, are not subject to service tax.

(12) Maintenance Charges Realized:
Maintenance charges collected for building security, cleaning, etc., qualify under "Maintenance and Repair Service." The appellant is liable to pay service tax on these charges but can claim cenvat credit for service tax paid to outsourcing agencies.

(13) Infrastructure Maintenance Charges Realized:
Charges for maintaining roads, electricity, and water supply systems are statutory levies and do not qualify as "Maintenance and Repair Service." Therefore, no service tax is payable.

(14) Interest receipts on Land (Duburi Steel Complex):
Interest collected for lease of land to industries is not subject to service tax under "Renting and Immovable Property."

(15) Contract Receipts (Construction):
The appellant pays service tax under "Commercial and Industrial Construction Services" for work orders received from government and corporations. This activity is liable for service tax.

Conclusion:
The appellant is liable to pay service tax on income from Ekamra Hat under "Mandap Keeper Service," maintenance charges under "Maintenance and Repair Service," and contract receipts under "Commercial and Industrial Construction Service." No penalties are imposed on the appellants, and the appeals are disposed of accordingly.