2024 (8) TMI 1330 - AT - Service Tax

Levy of service tax - appellant s activity of charging market fee for using licenses to traders/agents/factory etc. - Jurisdiction of officials of the DGGSTI - HELD THAT - This issue is no more res-integra. The Hon ble Supreme Court in the case of Krishi Upaj Mandi Samiti vs. Commissioner of Central Excise Service Tax 2022 (2) TMI 1113 - SUPREME COURT and held 'The fact that, on and after 1-7-2012, such activity by the Market Committees is put in the Negative List, it can safely be said that under the 2006 circular, the Market Committees were not exempted from payment of service tax on such activities. At this stage, it is required to be noted that it is not the case on behalf of the Market Committees that the activity of rent/lease on shop/land/platform as such cannot be said to be service. However, their only submission is that the Market Committees are exempted from levy of service tax on such service/activity as provided under the 2006 circular, which as observed hereinabove has no substance.' The adjudication is a quasi-judicial function of the departmental officers of the Central Board of Indirect Taxes and Customs. It is mandatory that a Show Cause Notice (SCN) is issued if the department contemplates any action prejudicial to the assessee. The SCN would detail the provisions of law allegedly violated and ask the noticee to show cause why action should not be initiated against him under the relevant provisions of the Act/Rules. Thus, an SCN gives the noticee an opportunity to present his case. It is noted that the SCN in the present case was issued by the Central Excise officer on 19.06.2014, which is well before the introduction of GST in India. Thereafter, the impugned order was passed in 2018, which was after the introduction of GST - Section 174 of the CGST Act 2017, unequivocally saved all rights, obligations, privileges and liabilities that were available under the old laws, which would continue in the new regime - Section 174 of the CGST Act 2017, unequivocally saved all rights, obligations, privileges and liabilities that were available under the old laws, which would continue in the new regime. It is noted that in the impugned order, the Commissioner (Appeals) has already upheld the demand for the normal period only. Therefore, this argument of the Counsel does not hold. The impugned order upheld - appeal dismissed.

Summary

Issues Involved:
1. Jurisdiction of the Adjudicating Authority
2. Limitation Period for Demand
3. Liability of Service Tax on Activities of the Appellant
4. Applicability of Exemption under Circular and Statutory Functions

Detailed Analysis:

1. Jurisdiction of the Adjudicating Authority:
The appellant contended that the Adjudicating Authority lacked jurisdiction to adjudicate the case. The appellant argued that the term 'Central Excise Officer' as defined under the Central Excise Act, 1944, did not include the adjudicating authority in this case. The appellant relied on the Tribunal decision in Teracom Ltd. vs. Commissioner of C. Ex. & S.T., Jaipur-I, which held that proceedings initiated by an officer without jurisdiction are not sustainable. However, the Tribunal noted that the Show Cause Notice (SCN) was issued by a Central Excise officer before the introduction of GST and that Section 174 of the CGST Act, 2017, saved all rights and obligations from the old laws. The Tribunal referenced a similar case by the Madras High Court, which upheld the jurisdiction of DGGI officers to issue SCNs post-GST. Consequently, the Tribunal held that the objections regarding jurisdiction did not sustain.

2. Limitation Period for Demand:
The appellant argued that the demand for the period 01.04.2012 to 30.06.2012 was barred by limitation. The Tribunal noted that the Commissioner (Appeals) had already upheld the demand for the normal period only, implying that the extended period of limitation was not invoked. Therefore, the argument regarding the time bar did not hold.

3. Liability of Service Tax on Activities of the Appellant:
The core issue was whether the appellant's activity of charging market fees for issuing licenses to traders/agents/factory owners was exigible to service tax. The Tribunal referred to the Hon'ble Supreme Court's decision in Krishi Upaj Mandi Samiti vs. Commissioner of Central Excise & Service Tax, which held that activities such as renting/leasing/allotment of shop/land/platform/space by Agricultural Produce Market Committees were taxable services prior to 01.07.2012. The Supreme Court clarified that such activities were not statutory functions and thus were not exempt from service tax.

4. Applicability of Exemption under Circular and Statutory Functions:
The appellant argued that its activities were mandatory and sovereign functions under the RAPM Act and thus exempt from service tax as per the Board's Circular dated 18.12.2006. The Tribunal, however, noted that the Supreme Court had clarified that only activities performed as mandatory statutory functions with fees collected as compulsory levies deposited into the Government Treasury would be exempt from service tax. The Supreme Court found that the appellant's activities under Section 9(2) of the RAPM Act were discretionary and not mandatory statutory duties. Additionally, the fees collected were not deposited into the Government Treasury but into the Market Committee Fund. Therefore, the Tribunal held that the appellant could not claim exemption from service tax for these activities.

Conclusion:
The Tribunal upheld the impugned order, dismissed the appeal, and found no infirmity in the Commissioner (Appeals)'s decision. The Tribunal confirmed that the appellant's activities were taxable and not exempt under the cited circular or statutory provisions. The objections regarding jurisdiction and the limitation period were also dismissed. The order was pronounced in the open court.