9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (3) TMI 970 - AT - Service TaxTax liability of the service provider providing Commercial and Industrial Construction Service to the public authorities - Period post 1st July 2007 - applicability of section 66D the negative list of services - HELD THAT - The scope of the circular the definition the exclusion clause of 65 (25 b) and that of mega-exemption notifications now stands clarified by Hon ble Supreme Court in the case of Krishi Upaj Mandi Samiti v. Commissioner of Central Excise and Service Tax 2022 (2) TMI 1113 - SUPREME COURT Hon ble supreme court has dealt with the Circular No. 89/7/2006 as relied upon by the present appellant as well. It has been held that Paragraph 3 of the Circular specifically clarifies that if such authority performs a service which is not in the nature of a statutory activity and the same is undertaken for consideration then in such cases service tax would be leviable if the activity undertaken falls within the ambit of a taxable service. Thus the circular exempts activities that are mandatory statutory obligations with fees deposited into the Government Treasury. Since the fees collected by APMCs were directed to the Market Committee Fund and not the Treasury the exemption did not apply. The Court further noted that language used in circular of 2006 is clear and unambiguous. Applying the principles of interpretation of statutes the Court observed that It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled the party is not entitled to the benefit of that notification. An exception and/or an exempting provision in a taxing statute should be construed strictly and it is not open to the court to ignore the conditions prescribed in the relevant policy and the exemption notifications issued in that regard - After carefully perusing the words used in S. 9 the Court stated that the activity cannot be said to be a mandatory statutory activity as contended by appellants since the fee collected is not deposited into the Government Treasury; it will go to the Market Committee Fund and will be used by the market committees. Thus such a fee collected cannot have the characteristics of the statutory levy/statutory fee. Thus under the 1961 Act it cannot be said to be a mandatory statutory obligation of the Market Committees to provide shop/land/platform on rent/lease. Conclusion - The functions of RIICO and RASMB are held to be discretionary functions for commercial purposes. Hence irrespective the roads or compound wall have been constructed for these local authorities the appellant is liable to pay service tax while providing the said services. There is no exemption available to the appellant while providing such services to any private entity whose interest is nothing except commercial. There are no infirmity in the findings arrived at by the adjudicating authority below - appeal dismissed.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Liability to Pay Service Tax for 'Commercial and Industrial Construction Services' Relevant Legal Framework and Precedents: The relevant legal framework includes Section 65B of the Finance Act, which defines 'service' and the applicability of service tax under Section 66B. The negative list under Section 66D and the exclusions provided therein are also pertinent. The Supreme Court's decision in Krishi Upaj Mandi Samiti v. Commissioner of Central Excise and Service Tax provides a precedent for interpreting service tax liability. Court's Interpretation and Reasoning: The Tribunal emphasized that services provided to commercial organizations, irrespective of their governmental status, are subject to service tax. The Tribunal relied on the Supreme Court's interpretation that discretionary functions performed by public authorities are taxable unless explicitly exempted. Key Evidence and Findings: The Tribunal noted that the appellant did not provide sufficient documentary evidence to separate road construction from overall commercial construction services, which would have been necessary to claim exemptions. Application of Law to Facts: The Tribunal applied the Supreme Court's reasoning to conclude that the functions of RIICO and RSAMB are discretionary and commercial, thus subject to service tax. The Tribunal also considered the lack of evidence supporting the appellant's claim for exemption. Treatment of Competing Arguments: The Tribunal dismissed the appellant's reliance on Circular No. 80/10/2004, emphasizing that the circular exempts only mandatory statutory activities with fees deposited into the Government Treasury. Conclusions: The Tribunal concluded that the appellant is liable to pay service tax for services provided to RSAMB, RIICO, and private entities, as these services do not qualify for exemption. 2. Applicability of Exemptions under Notifications and Circulars Relevant Legal Framework and Precedents: The relevant notifications include Notification No. 25/2012 and Circular No. 80/10/2004. The Tribunal also referenced the Supreme Court's interpretation of exemption notifications in Krishi Upaj Mandi Samiti. Court's Interpretation and Reasoning: The Tribunal interpreted the exemptions narrowly, in line with the Supreme Court's directive for strict construction of exemption notifications. The Tribunal found that the exemptions did not apply to the appellant's services, as they were not mandatory statutory activities. Key Evidence and Findings: The Tribunal found no evidence that the appellant's services were exempt under the cited notifications, as the services were provided to commercial entities and not public roads or infrastructure. Application of Law to Facts: The Tribunal applied the Supreme Court's principles to determine that the appellant's services did not meet the conditions for exemption under the relevant notifications. Treatment of Competing Arguments: The Tribunal rejected the appellant's arguments for exemption, emphasizing the commercial nature of the services and the lack of statutory obligation. Conclusions: The Tribunal concluded that the appellant's services do not qualify for exemption under the cited notifications and circulars. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal cited the Supreme Court's decision: "Exemption from service tax is strictly confined to mandatory statutory activities. Discretionary functions, even if performed by public authorities, remain subject to service tax unless explicitly exempted." Core Principles Established: The Tribunal reinforced the principle that service tax exemptions are to be interpreted strictly, and only mandatory statutory activities qualify for such exemptions. Discretionary functions, even by public authorities, are taxable unless specifically exempted. Final Determinations on Each Issue: The Tribunal upheld the adjudicating authority's order, dismissing the appellant's appeal and confirming the service tax liability for the services provided to RSAMB, RIICO, and private entities.
|
