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2024 (4) TMI 435 - AT - Service TaxLevy of service tax - various public amenities provided by the Municipal Corporation such as market space, bus stands, vehicle stands, slaughter houses etc. - Taxability of services provided by the appellant to various telecom companies by way of permitting them to lay terrestrial and overhead communication cables in corporation property - Taxable value of arrears recovery pertaining to service provided prior to 1.4.2011 - Methodology adopted by the Revenue to arrive at the taxable value - Extended period of Limitation - suppression of facts or not. Levy of service tax - various public amenities provided by the appellant such as market space, bus stands, vehicle stands, slaughter houses etc. - claim of the appellant is that these are the sovereign functions entrusted to them by the Kerala Municipality Act ,1994 - HELD THAT - In the case of KARAD NAGAR PARISHAD VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, KOLHAPUR 2018 (2) TMI 733 - CESTAT MUMBAI , the Tribunal held that Regulation of slaughter houses is the sovereign function of the Municipal Corporation therefore the fees collected towards the regulation of slaughter houses, the demand of Service Tax does not arise. In view of the above, the demands against the Appellant with regard to the rent markets, bus stands, vehicle stand, slaughter house and comfort station are set aside as they are the sovereign functions of the appellant and it is immaterial whether they are delivered directly or through the intermediaries. However, the Commissioner also observes that in certain cases, the appellant has collected the Service Tax and therefore, even though they are not liable to service tax, the tax collected needs to be deposited with the tax authorities. Taxability of services provided by the appellant to various telecom companies by way of permitting them to lay terrestrial and overhead communication cables in corporation property - appellant s grievance is that these amounts do not figure in their Income and Expenditure Statement along with the advanced accounts which has been the basis for arriving at the taxable value - HELD THAT - Since the agreements are on record and clearly establish that part of the amounts have been retained by the appellant for certain services rendered by them to M/s. Reliance Jio Infocomm Limited, the demand of Service Tax is justified and to that extent, the order is upheld. These agreements were not on record and admittedly, the payments were also not shown in the income and expenditure statement thus, non-disclosure of the amounts collected and retained amounts to suppression of facts with intent to evade payment of duty. Therefore, the Service Tax on Telecom charges is upheld, for these agreements beyond the normal period. Taxable value of arrears recovery pertaining to service provided prior to 1.4.2011 - appellant claims that this amount of Rs.3,68,00,915/- includes the arrears for the year 2011-12 which is already included in the year 2012 - HELD THAT - According to the appellant, the actual taxable amount is the amount received during October 2011 to March 2012 which is Rs.37,13,989/- as against Rs.3,68,00,915/-. The submission of the learned Consultant agreed upon that the any arrears beyond 5 years is not sustainable but since these are factual data errors as has been explained by the Consultant, the same needs to be verified before finalisation of demand. Methodology adopted by the Revenue to arrive at the taxable value - Commissioner observed that all incomes are recognised on accrual basis - HELD THAT - Considering the provisions of the Point of Taxation Rules 2011, it is found that the income and expenditure statement of the SSC along with advanced accounts will only render true reflection of the taxable value of the SSC, accordingly the taxable value reworked on the basis of the figures reflected in the income and expenditure statement and the advanced accounts . The only objection on this observation by the appellant is that he has traversed beyond the show-cause notice as the notice demanded duty based on the credit transactions reflected in the Trial Balance, wherein the Commissioner found that it was not the right method for arriving at the taxable value; since, they are not the final income receipts, thus traversed beyond the show-cause notice - there are no reason to interfere with this observation of the Commissioner in as much as he has in fact accepted the objections raised by the appellant with regard to the methodology of arriving at the taxable value by the Revenue at the time of issuance of the notice and considering the accounting methods has rightly arrived at the taxable value based on income and expenditure statement and the advanced accounts . There are nothing wrong in the methodology adopted by the Commissioner, which is also not disputed by the appellant except for stating that he has traversed beyond the notice. Extended period of Limitation - suppression of facts or not - HELD THAT - Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. On the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of facts. An incorrect statement cannot be equated with a wilful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct. - there is nothing on record in the impugned order to establish that the appellant s intention to evade payment of duty - the demand for the extended period is set aside and demand restricted to the normal period of limitation except in the case of a telecom transactions, as they were not part of the income expenditure statement of the appellant. Since the demand except for telecom services are barred by limitation, the matter is being remanded for redetermination of the taxes based on our observations under each category. While redetermining the same, the written submissions dated 19.10.2023 filed by the appellant with regard to the factual errors and duplication of taxes need to be considered. An opportunity of being heard is to be provided before redetermination of the demands to the appellants - All penalties are set aside. Appeals allowed by way of remand.
Issues Involved:
1. Taxability of services rendered by the appellant. 2. Taxability of services provided to telecom companies. 3. Methodology for determining taxable value. 4. Invocation of the extended period of limitation. Summary: 1. Taxability of services rendered by the appellant: M/s. Thrissur Municipal Corporation appealed against the order dated 3.7.2018 by the Commissioner Central GST and Central Excise, Kozhikode, confirming Service Tax demand u/s 73(2) along with interest and penalty for services rendered from October 2011 to September 2016. The appellant argued that services like bus stands, markets, slaughterhouses, and parking are civic amenities under Article 243W of the Constitution of India and fall under the negative list. The Tribunal held that these services are sovereign functions and not taxable under "renting of immovable property" as per Notification No.25/2012-ST dated 20.06.2012. 2. Taxability of services provided to telecom companies: The appellant received payments from M/s. Reliance Jio Infocomm Limited for permitting the laying of cables. The Tribunal upheld the Service Tax demand on amounts retained by the appellant for services rendered to Reliance Jio, as these were not entirely refundable deposits. The non-disclosure of these amounts in the 'Income and Expenditure Statement' amounted to suppression of facts with intent to evade payment of duty. 3. Methodology for determining taxable value: The Commissioner reworked the taxable value based on the "Income and Expenditure Statement" and "Advanced Accounts" instead of the Trial Balance, which was found to be an incorrect method. The Tribunal agreed with the methodology adopted by the Commissioner, stating it rendered a true reflection of the taxable value. 4. Invocation of the extended period of limitation: The Tribunal found no intent to evade payment of duty by the appellant, as there was no material evidence of suppression of facts. The demand for the extended period was set aside, restricting it to the normal period of limitation, except for telecom transactions not part of the income expenditure statement. The Tribunal remanded the matter for redetermination of taxes based on factual errors and duplication of taxes, with an opportunity for the appellant to be heard. All penalties were set aside. Conclusion: The appeal was allowed by way of remand, with the order pronounced in Open Court on 10.04.2024.
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