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2024 (4) TMI 430 - AT - Service TaxLevy of service tax - Manpower Recruitment or Supply - Rent a cab Service - Renting of Immovable Property Service - amount towards Tower verification charges under the head Business Support Service - reverse charge mechanism - penalty u/s 77 and 78 of FA - Extended period of limitation. Manpower Recruitment or Supply service - HELD THAT - The Greater Hyderabad Municipal Corporation is neither a business entity, ordinarily, in terms of Section 65B (17) of the Finance Act 1994 nor a body corporate in terms of Section 65 (14) of the Finance Act 1994 read with Clause (7) of Section 2 of the Companies Act, 1956 nor registered as body corporate under the Companies Act, 1956, or any other Act - The appellant is basically a Local Authority performing statutory functions in terms of GHMC Act, 1955, passed by AP State Legislature and constitutional functions in terms of Article 243W of the Constitution of India, read with Twelfth Schedule of the Constitution and undertakes public services. Local Authority cannot be considered as a commercial organisation, as held by the Tribunal in the case of COMMISSIONER OF CEX ST BHOPAL versus SUNIL SHRIVASTAVA 2018 (7) TMI 1212 - CESTAT NEW DELHI . GHMC is not so registered either under the Andhra Pradesh Societies Registration Act or Companies Act 1956. On the other hand, it was brought in to existence by a special enactment i.e. GHMC Act 1955, passed by the Andhra Pradesh State Legislature. GHMC is not a body corporate within the meaning of Section 65(14) of the Finance Act, 1994, read with clause (7) of Section 2 of the Companies Act, 1956 - the appellant is neither a business entity nor a body corporate. Consequently, the appellant is not liable to pay service tax on Manpower Supply services and Rent a Cab service, under Reverse Charge in terms of Notification No. 30/2012-ST dated 20.06.2012. Accordingly, this ground is allowed in favour of the appellant and set aside the demand of Rs Rs.30,71,27,798/- on Manpower Supply services and Rs.1,49,02,365/- on Rent a Cab service under Reverse Charge, in terms of Notification No. 30/2012-ST dated 20.06.2012. Demand of service tax on Cell Tower Verification fee under Business Support Services - HELD THAT - It is admitted fact that the said activity is a statutory and regulatory function performed by the appellant in terms of Government Orders issued by the State Government. In terms of the said Government Orders, no person shall erect or re-erect any non-Governmental telecommunication tower or telecommunication pole structures or accessory or make alteration or cause the same to be done without first obtaining a separate permission for each such tower or telecommunication pole structures from the Sanctioning Authority. The regulatory nature of the activity of the appellant is discernible from the fact that it requires a certificate of structural safety/stability of the tower and the building, if the tower or pole is constructed over a building and the permission is issued keeping various aspects like water bodies, railways, Airports etc in view - There is neither rendition of any service nor realisation of service consideration, as the amount collected is only a statutory fee. Therefore, we hold that the activity of Cell Tower Verification and certification undertaken by the appellant is a mandatory statutory and regulatory function in the public interest, which is not leviable to service tax as clarified in the Circular No. 89/7/2006-ST dated 18.12.2006 and held in a catena of decisions relied on by the appellant. In respect of the services provided or agreed to be provided by Government or local authority by way of support services excluding,- (1) renting of immovable property, and (2) services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act,1994,the recipient is liable to pay Service Tax in terms of S.No.6 of Notification No.30/2012-ST dated 20.06.2012 - this ground is allowed in favour of the appellant and the demand of Rs. 1,70,83,907/- set aside. Demand of service tax Rs.15,18,18,931/- on Road Cutting and Refilling Services (Right of Way of Laying Cables), under Renting of Immovable Property Service - HELD THAT - In terms of Notification No. 1/2018- dated 30.11.2018, issued under section 11C of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994, and clause (e) of sub-section (2) of section 174 of the Central Goods and Services Tax Act 2017, it is notified that the service tax payable under section 66B of the Finance Act, 1994,during the period commencing on and from the 1st day of July, 2012 and ending with the 30th day of June, 2017, on the services by way of granting of right of way by local authorities , as defined in Sub Section (7) of Section 3 of the Indian Telegraph Act, 1885, in the said period, but for the said practice, shall not be required to be paid - In terms of Sub Section (7) of Section 3 of the Indian Telegraph Act, 1885, local authority means any municipal committee, district board, body of port commissioner or other authority legally entitled to, or entrusted by the Central or any State Government with the control, management of any municipal or local fund. It is an admitted fact that the appellant is a Local Authority, as defined in Sub Section (7) of Section 3 of the Indian Telegraph Act, 1885, entrusted with the control, management of municipal fund, in terms of Section 169 of the GHMC Act 1955. The service tax demand on the services by way of granting of right of way by the appellant are not leviable to service tax during the period commencing on and from the 1st day of July, 2012 and ending with the 30th day of June, 2017 in terms of Notification No. 1/2018- dated 30.11.2018 - the demand is set aside - allowed in favour of appellant. The appropriation of Rs.7,98,52,484/- paid by the appellant during investigation is not legally sustainable and accordingly set aside the same. Penalty imposed under Section 77 78 of the Finance Act, 1994 - HELD THAT - As the appeal allowed on merits, in favour of the appellant, the penalty imposed under Section 77 78 of the Finance Act, 1994 is set aside. The impugned order set aside - appeal allowed.
Issues Involved:
1. Demand of service tax under reverse charge mechanism for Manpower Recruitment or Supply and Rent a cab Service. 2. Demand of service tax on Road Cutting and Refilling Services under Renting of Immovable Property Service. 3. Demand of service tax on Tower Verification charges under Business Support Service. 4. Imposition of penalty u/s 78 of the Finance Act, 1994. 5. Invocation of extended period of limitation for issuing the show cause notice. Summary: 1. Demand of Service Tax on Manpower Recruitment or Supply and Rent a Cab Service: The Tribunal found that the Greater Hyderabad Municipal Corporation (GHMC) is neither a "business entity" nor a "body corporate" as defined u/s 65B(17) and 65(14) of the Finance Act, 1994, read with Clause (7) of Section 2 of the Companies Act, 1956. GHMC, being a local authority performing statutory functions, does not engage in activities related to industry, commerce, or business. Consequently, the demand of Rs. 30,71,27,798/- on Manpower Supply services and Rs. 1,49,02,365/- on Rent a Cab service under Reverse Charge Mechanism, in terms of Notification No. 30/2012-ST dated 20.06.2012, was set aside. 2. Demand of Service Tax on Road Cutting and Refilling Services: The Tribunal noted that the activity of granting "right of way" by GHMC for laying cables is not taxable under Renting of Immovable Property Service. It was held that the service tax demand for the period from 1st July 2012 to 30th June 2017 is not leviable in terms of Notification No. 1/2018 dated 30.11.2018. Furthermore, for the period prior to 1st July 2012, the demand was also not sustainable as per the decision in CUDDALORE MUNICIPALITY Versus JOINT COMMR. OF GST & C. EX., TIRUCHIRAPPALLI. Consequently, the demand of Rs. 15,18,18,931/- was set aside. 3. Demand of Service Tax on Tower Verification Charges: The Tribunal held that the activity of Cell Tower Verification and certification by GHMC is a statutory and regulatory function, not liable to service tax. It was clarified that such functions do not constitute taxable services as per Circular No. 89/7/2006-ST dated 18.12.2006. The demand of Rs. 1,70,83,907/- under Business Support Services was set aside. 4. Imposition of Penalty u/s 78 of the Finance Act, 1994: Since the appeal was allowed on merits, the penalty imposed under Section 77 & 78 of the Finance Act, 1994, was set aside. 5. Invocation of Extended Period of Limitation: As the appeal was allowed on merits, the Tribunal left the ground of limitation open. Conclusion: The impugned order was set aside, and the appeal was allowed with consequential benefits to the appellant in accordance with law. The appropriation of Rs. 7,98,52,484/- paid by the appellant during the investigation was also set aside.
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