2018 (11) TMI 837 - AT - Service Tax

Business auxiliary service - amounts collected as toll fee and paid to National Highways Authority of India (NHAI) - Held that - Identical issue decided in the case of IDEAL ROAD BUILDERS PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI 2015 (8) TMI 592 - CESTAT MUMBAI , where it was held that collection of tolls by the appellant is not considered as Business Auxiliary Service provided to NHAI as appellant is not rendering any service which is incidental or auxiliary on behalf of NHAI - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Demand of service tax for toll fee collection as a commission agent of NHAI under Business Auxiliary Services.

Detailed Analysis:
The appeal addressed the issue of service tax demand for toll fee collection by the appellant, acting as a commission agent of NHAI, for the period from 01.07.2005 to 30.06.2006. The Revenue contended that the appellant's toll fee collection amounted to providing services under Business Auxiliary Services. The Adjudicating Authority upheld the demands raised. However, the appellant argued that a previous Tribunal judgment favored their position, citing the case of Ideal Road Builders P. Ltd. [2015 (40) STR 480], which addressed a similar issue. The Tribunal examined the provisions of Section 65(19) of the Finance Act, 1994, pre and post 9-9-2004, defining Business Auxiliary Service, emphasizing the nature of services covered under this category.

Further analysis revealed that NHAI, a statutory body established for national highway development, maintenance, and management, was not engaged in commercial activities but performed sovereign functions. The agreement between the appellant and NHAI did not designate the appellant as an agent/representative; instead, it referred to toll collection as a "fee." The Tribunal dismissed the service tax liability imposed by the Adjudicating Authority, citing precedents such as CST v. Intertoll ICS CE Cons O & M P. Ltd. and PNC Construction Co. Ltd. v. CCE, which supported the view that providing Business Auxiliary Services to NHAI was not feasible due to NHAI's non-commercial nature.

The Tribunal also referenced decisions in cases like Intertoll India Consultants P. Ltd. v. CCE and Swarna Tollway P. Ltd. v. CC & CE to reinforce its stance that toll fee collection did not fall under Business Auxiliary Services. The judgment in Patel Infrastructure P. Ltd. v. CCE further supported this position. Based on these authoritative judicial pronouncements, the Tribunal concluded that toll collection by the appellant did not constitute Business Auxiliary Services provided to NHAI. Consequently, the impugned order was set aside, and the appeal was allowed, aligning with the precedent set in Ideal Road Builders P. Ltd. The Tribunal did not delve into other submissions, given the clear precedent favoring the appellant's position.

In summary, the judgment extensively analyzed the issue of service tax demand for toll fee collection by the appellant as a commission agent of NHAI under Business Auxiliary Services. By referencing relevant legal provisions and previous judicial decisions, the Tribunal concluded that toll collection did not amount to providing Business Auxiliary Services to NHAI, ultimately setting aside the impugned order and allowing the appeal.