2024 (8) TMI 1409 - AT - Service Tax

Levy of service tax - Road Cutting Charges - Land Application Processing Charges - Street Light Charges - whether nature of service on which demand of service tax has been confirmed are either exempted services or no service element is involved? - determination of differential value of service tax - invocation of extended period of limitation - suppression of facts or not. Road cutting charges - demand confirmed as no documentary evidence has been produced by the appellant to show that the said amount is actually used for construction or repair of road - HELD THAT - The case of the revenue is not that the roads are not for use by general public. The objection rather is that in the absence of documentary evidence, it is not clear that this amount is actually used for construction or repair of roads. The appellant has submitted the copy of the ledger which shows that against the total amount of ₹67, 500, the appellant received sum of ₹57,700/- for road cutting charges from Gail Gas Dewas and thereafter small amounts of ₹3,000/- have been received from other companies which, according to the appellant have been received for construction of public road, which has been damaged by them on account of their personal work done on the public road at industrial area in Dewas. There is no reason to deny the benefit of the exemption notification and therefore, the demand of service tax is unsustainable. Land Application Processing Fees - HELD THAT - The description given by the appellant is that the fees charged for processing the land application form for the allotment of land to industrial units, is actually the purchase of land application form for purchase of land for which forms are generally published online and the industrial units submit the required details in the said application along with the land premium which is actually related to the purchase of the land. The processing fees does not relate to any specific activity of processing. The learned counsel for the appellant agreed upon that the term land application processing fees has been wrongly interpreted by the revenue without appreciating the nature of activity involved. Hence, there is no service element involved therein and therefore, no service tax is leviable. Street Light Charges - HELD THAT - The first and the primary condition is that the person enters into a contractual agreement with the recipient of service to incur expenditure or cost in the course of providing taxable service, however, as noted by the authorities below, the appellant failed to submit the copy of agreement or contract with MPEB to show that he was acting as their pure agent. Further, the appellant has not even submitted any proof of payment or expenses to MPEB, which is specifically provided in the definition that the person receives the actual amount incurred to procure such goods or services. In view thereof, the appellant is not entitle to any relief on that account and is liable to pay the service tax as confirmed by the authorities below. The differential value of service tax has been included by the revenue on the ground that the appellant had justified sum of ₹25,27,169/- only out of the total taxable value shown as Rs.25,83,338/- and therefore on the amount of ₹56,169/-, service tax is leviable - HELD THAT - It appears that amount of Rs.25,83,338/- has been directly taken from Note 16 of the balance sheet, whereas the appellant had taken the amount as per the Ledger records. The revenue was required to clarify the service under which the differential amount of ₹56,169/- was chargeable. The appellant has rightly contended that no service tax can be determined without clarifying the category of service under which the said amount can be attributed. Consequently, the service tax on account of differential value cannot be sustained. Extended period of limitation - suppression of facts or not - HELD THAT - The revenue has taken the details of the valuation from the balance sheet and the profit and loss account maintained by the appellant. Hence there is no suppression justifying the invocation of the extended period of limitation. Since the demands under the different categories has been confirmed by invoking the extended period of limitation, which is not invokable, the impugned demands are unsustainable. The impugned order deserves to be set aside - Appeal allowed.

Summary

Issues:
1. Confirmation of demand of service tax on various charges.
2. Interpretation of exemption notifications for road cutting charges.
3. Taxability of land application processing fees.
4. Liability for street light charges.
5. Determination of differential value of service tax.
6. Invocation of extended period of limitation.

Analysis:
1. The appellant contested the demand of service tax on road cutting charges, land application processing fees, and street light charges. The appellant argued that the road cutting charges were exempt under Notification No. 25/2012 as they were used for construction or repair of roads. The appellant provided evidence of receiving amounts for road construction, leading to the conclusion that the demand was unsustainable.

2. Regarding the land application processing fees, the appellant clarified that the fees were for purchasing land application forms and not for any specific processing service. The nature of the activity did not involve any service element, making it not liable for service tax.

3. The street light charges were explained by the appellant as payments made to the electricity board for installing street lights in industrial areas. The appellant claimed to act as a pure agent in this transaction. However, due to the lack of evidence of a contractual agreement or proof of expenses incurred, the appellant was held liable for service tax on street light charges.

4. The differential value of service tax was disputed by the appellant, arguing that the service category under which the amount was chargeable was not clarified by the revenue. Without proper categorization, the service tax on the differential value was deemed unsustainable.

5. The appellant challenged the invocation of the extended period of limitation for the show cause notice dated 25.05.2016, contending that there was no suppression, fraud, or wilful misstatement. Citing precedents, the appellant argued that the extended period cannot be invoked when services rendered are reflected in public documents like balance sheets and income tax returns. As the revenue based the demand on such documents, the extended period was deemed inapplicable, leading to the unsustainability of the demands.

6. The Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the impugned order due to the unsustainable nature of the demands based on the issues discussed above.