2021 (11) TMI 990 - AT - Service Tax

Non-payment of service tax - service of covering of shed/constructing a common auction platform to M/s. Rajasthan State Agriculture Marketing Board - Department after observing that the appellant has provided work contract service to RSAMB during the financial year 2012-2013 alleged that service tax has not been paid by the appellant - whether the construction of common auction platform for RSAMB is the taxable service or not? - HELD THAT - Any service provided to an agriculture produce marketing committee or any service relating to agriculture or agricultural produce even that of construction for infrastructure for agriculture or agriculture produce specially when provided to a government / local authority acting under statute meant for such use is different from Commerce or Industry, tax is not leviable on such service - In the present case, there is no denial even by Commissioner (Appeals) that RSAMB is the Governmental body and the construction of platform is meant to be used for the agriculture produce. The only reason for which Commissioner (Appeals) has confirmed the demand is that RSAMB is the body corporate engaged in the business of sale and purchase of movable as well as immovable property, export of fruits and vegetables, renting of immovable property to commercial establishment and operating the e-private market/ private market, accordingly, concluded that the construction of platform and shops are not for the use other than the commerce or industries. The order-in-original has specifically recited that no service tax has been collected by the appellant from RSAMB which is governmental body which got platform constructed with objective to facilitate the farmers however without charging any consideration. Commissioner (Appeals) also in the impugned order has recited about the certificate of competent authority as being produced by the appellant certifying therein that the structure is used by the farmers free of charge for post harvest operation. The said certificate is sufficient to falsify the findings of the Commissioner (Appeals) that the platform was for the use as that of commerce and industry - The fact remains is that the service have been provided to a legal body existing under the statute under the mandate of article 243 (W) of Constitution of India. In view of the apparent and admitted facts irrespective that nature of impugned service is that of work contract service but there is no liability on the appellant to pay the service tax appellant being a statutory body and service provided is in negative list being meant for agriculture produce with no element of business or profit. Demand has therefore, wrongly been confirmed even for the period 1.4.2012 to 30.6.2012 - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the construction of a common auction platform for a governmental body is a taxable service.
2. Whether the service provided falls under the negative list of services related to agriculture or agricultural produce.
3. Whether the demand for service tax is justified based on the nature of the service provided.

Analysis:
1. The case involves an appeal against a service tax demand on the construction of a platform for an agriculture marketing board. The appellant argued that no fee was charged from farmers for using the platform, emphasizing the service's connection to agriculture. The department contended that the activity is commercial in nature, supported by the original adjudicating authority's observations.

2. The Tribunal analyzed the negative list of services under section 66D of the Finance Act, which includes services related to agriculture or agricultural produce. The service provided to the agriculture marketing committee falls under this list, exempting it from service tax. The Tribunal highlighted the specific notification amendments supporting the exemption for services related to agriculture infrastructure.

3. The Tribunal found that the construction service provided to the governmental body for agricultural purposes, without any business or profit motive, is not subject to service tax. The Commissioner's conclusion that the construction was for commercial or industrial use was challenged based on the evidence that the platform was used by farmers free of charge for post-harvest operations. The Tribunal emphasized the statutory nature of the body receiving the service and the absence of any consideration for the service provided.

In conclusion, the Tribunal set aside the demand for service tax, ruling in favor of the appellant due to the service falling within the negative list of services related to agriculture. The judgment highlighted the statutory and non-commercial nature of the service provided to a governmental body for agricultural purposes, ultimately allowing the appeal against the service tax demand.