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2025 (4) TMI 1340 - AT - Service TaxClassification of services - Tour Operators Service - Short-term accommodation service - activities undertaken by the appellant a statutory authority managing the Anamalai Tiger Reserve - HELD THAT - The fact remains that the activities of the appellant are clearly in terms of the provisions of WPA which is the governing Statute insofar as the Appellant-forest department is concerned. There is also a categorical finding that the appellant is charging fees as prescribed by the Government which is also apparently accepted without there being any specific denial by the First Appellate Authority or the Revenue in its grounds of appeal before the First Appellate Authority. Hence the charging of the fees is clearly in terms of the statutory provisions only. There is also a categorical finding as to usage of the fees so collected which is also not disputed by the Revenue or in the impugned order. Thus we find that the Board s clarification No.96-supra comes to the rescue of the Appellant. Conclusion - The appellant being a statutory body is not carrying out any activity of business to be taxable under Tour operator service or under Short term Accommodation Service . There is also a clear observation in the impugned order insofar as the penalty is concerned that there is a prima facie doubt about the Taxability and that the appellant is a State Government Executive the same logic would equally apply when it comes to invoking the extended period of limitation is concerned. Appeal allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal were:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1 & 2: Taxability of Activities as 'Tour Operator Services' and 'Short-term Accommodation Service' Relevant legal framework and precedents: The Finance Act, 1994 defines 'Tour Operator Services' under Section 65(105)(n) and 'Short-term Accommodation Service' under Section 65(105)(zzzzw) as taxable services. The appellant's activities were alleged to fall within these categories. The Wild Life (Protection) Amendment Act, 2006 ('WPA') governs the appellant's statutory functions related to conservation and eco-tourism. CBEC Circular No. 96/7/2007-ST dated 23.08.2007 clarifies that activities performed by a sovereign/public authority under statutory provisions are not taxable services. Court's interpretation and reasoning: The Tribunal noted that the Original Authority had found the appellant's activities to be integral statutory functions under the WPA, aimed at conservation and sustainable livelihood of tribals, and not commercial business activities. The fees collected were prescribed by the Government and credited to the Anamalai Tiger Conservation Foundation Fund for conservation purposes. The Tribunal emphasized that the First Appellate Authority did not dispute these factual findings or provide documentary evidence contradicting them. Key evidence and findings: The Original Authority's Order-in-Original No. 09/2014-ADC dated 28.02.2014 was pivotal, establishing that the fees collected were statutory charges used solely for conservation and livelihood objectives. The appellant was not engaged in commercial tourism business but was discharging statutory functions under the WPA. The CBEC Circular was relied upon to hold that such sovereign functions do not constitute taxable services. Application of law to facts: The Tribunal applied the statutory framework and the Circular to conclude that the appellant's activities did not amount to taxable services under the Finance Act. The charging of fees was statutory and for conservation purposes, not for commercial gain. Hence, the appellant was not liable to pay service tax on these activities. Treatment of competing arguments: The Revenue's contention that the activities fell within taxable categories was considered but found lacking in documentary support and contradicted by statutory provisions and the admitted facts. The Tribunal found that the First Appellate Authority's acceptance of the Revenue's appeal was not supported by evidence and failed to address the statutory context adequately. Conclusions: The appellant's activities did not constitute 'Tour Operator Services' or 'Short-term Accommodation Service' taxable under the Finance Act. The fees collected were statutory charges for conservation, not commercial service charges. Issue 3: Invoking Extended Period of Limitation and Penalty Relevant legal framework and precedents: Extended limitation periods can be invoked in cases of suppression of facts or fraud. Penalties under service tax laws are generally imposed when there is clear tax evasion or wilful default. The Tribunal noted the First Appellate Authority's finding of prima facie doubt regarding taxability and the appellant's status as a State Government executive agency. Court's interpretation and reasoning: The Tribunal observed that the existence of a bona fide doubt about the taxability of the services militated against invoking the extended period of limitation or imposing penalties. The appellant was carrying out statutory functions with no intention of evading tax. The First Appellate Authority's decision to set aside penalties was consistent with this reasoning. Key evidence and findings: The appellant's detailed replies and documentary evidence demonstrated no suppression of facts. The fees collected were transparent and utilized for statutory purposes. The Tribunal found no basis for extended limitation or penalty. Application of law to facts: Given the statutory nature of the activities and the admitted facts, the Tribunal held that the extended period of limitation was not invokable and penalties were not justified. Treatment of competing arguments: The Revenue's attempt to invoke extended limitation and penalties was rejected due to lack of evidence of suppression or wilful default and the presence of genuine legal doubt. Conclusions: Extended limitation and penalty provisions were not applicable in the facts and circumstances of the case. 3. SIGNIFICANT HOLDINGS The Tribunal held:
The Tribunal conclusively set aside the impugned order demanding service tax and allowed the appeal, thereby affirming that statutory functions performed by a government department under the WPA, involving collection of fees for eco-tourism and accommodation, do not constitute taxable services under the Finance Act, 1994. Core principles established include the non-taxability of sovereign functions performed by statutory authorities, the applicability of CBEC clarifications exempting such activities from service tax, and the inapplicability of extended limitation and penalties in cases involving bona fide legal doubts about taxability.
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