2024 (1) TMI 520 - AT - Service Tax

Classification of services - Management Maintenance or Repairing Services or not - GIDC is collecting charges towards the maintenance and providing common facilities such as approach roads, street lights, etc. - HELD THAT - This Tribunal in this appeal vide its order no. A/12479/2018 dated 30.10.2018 2018 (11) TMI 363 - CESTAT AHMEDABAD allowed the appeal by holding that there is no taxability on Maintenance Charges collected by State Industrial Development Corporation from the industrial plot owners. From the finding of the Hon ble Supreme Court in KRISHI UPAJ MANDI SAMITI, NEW MANDI YARD, ALWAR VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, ALWAR 2022 (2) TMI 1113 - SUPREME COURT , it is seen that the statutory levy has been interpreted on the basis that if the levy is mandatory than only it is statutorily and if it is discretionary then it cannot be treated as statutory levy. The Hon ble Apex Court interpreted the Section 9 (2) (xvii) that as per the said section word may was used which indicates that it is not a mandatory levy hence the exemption provided as per the board circular dated 18.12.2006 shall not apply. In the present case the demand was raised on the service of management, maintenance and repair service for which the charges are prescribed. In the Rule 13 wherein the words used are Service charged determined from time to time shall have to be paid by the hirer to the corporation . This clearly indicated that the charges for maintenance is mandatory hence it is clearly a statutory levy on which no service tax is chargeable as clarified in the board circular No. 89/7/06 dated 18.12.2006 read with observation of the Hon ble Supreme Court in the case of Krishi Upaj Mandi Samiti and therefore, in the present case the charges being statutory levy, the same is not liable to Service Tax. The impugned order is set aside - Appeal is allowed.

Summary

Issues Involved:
1. Whether the maintenance charges collected by Gujarat Industrial Development Corporation (GIDC) are liable for service tax under "Management Maintenance or Repairing Services".
2. The applicability of the Supreme Court judgment in Krishi Upaj Mandi Samiti vs. CCE & ST to the present case.
3. Interpretation of statutory levy and its implications on service tax applicability.

Summary:

Issue 1: Liability of Maintenance Charges for Service Tax
The GIDC, an undertaking of the Government of Gujarat, collects charges for maintenance and common facilities, which the department categorizes as taxable under "Management Maintenance or Repairing Services" per Section 65(64) of the Finance Act, 1994. The Tribunal previously allowed the appeal, citing the Bombay High Court's decision in Maharashtra Industrial Development Corporation, which held that such charges are not subject to service tax.

Issue 2: Applicability of Supreme Court Judgment in Krishi Upaj Mandi Samiti Case
The Supreme Court remanded the matter to the Tribunal, directing it to consider the implications of its judgment in Krishi Upaj Mandi Samiti vs. CCE & ST. The Court clarified that activities performed by sovereign/public authorities under statutory obligations, where fees are deposited into the Government Treasury, are not taxable. However, if the service is discretionary and not a statutory obligation, it is taxable.

Issue 3: Interpretation of Statutory Levy
The Tribunal examined Rule 13 of the Disposal of Property Regulations, 1967, issued under Section 54 of the GID Act, 1962, which mandates that service charges must be paid by the hirer to the corporation until a local authority takes over. The Tribunal concluded that since these charges are mandatory, they constitute a statutory levy, and thus, no service tax is chargeable, aligning with the Supreme Court's interpretation in the Krishi Upaj Mandi Samiti case.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, ruling that the maintenance charges collected by GIDC are a statutory levy and not liable for service tax. The decision was pronounced in open court on 05.01.2024.