2023 (4) TMI 716 - SCH - Service Tax

Levy of Service Tax - activities performed by the sovereign/public authorities under the provisions of law being mandatory and statutory functions - fee collected for performing such activities is in the nature of compulsory levy as per the provisions of the relevant statute or not - said amount deposited into the Government treasury - HELD THAT - The effect of the decision of this Court in the case of KRISHI UPAJ MANDI SAMITI, NEW MANDI YARD, ALWAR VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, ALWAR 2022 (2) TMI 1113 - SUPREME COURT vis-avis the functioning of the Gujarat Industrial Development Corporation under the Gujarat Industrial Development Act, 1962 (GID Act) are required to be considered by the Tribunal in light of the law laid down by this Court in the case of Krishi Upaj Mandi Samiti, where it was held that As per the exemption circular only such activities performed by the sovereign/public authorities under the provisions of law being mandatory and statutory functions and the fee collected for performing such activities is in the nature of compulsory levy as per the provisions of the relevant statute and it is deposited into the Government treasury, no service tax is leviable on such activities. The impugned judgment and order passed by the Tribunal in appeal as well as the review application(s) are hereby quashed and set aside. The appeal is ordered to be remitted back to the Tribunal - Appeal allowed by way of remand.

Summary

Issues involved: Challenge to the judgment of the Customs, Excise & Service Tax Appellate Tribunal based on reliance on a previous decision of the Bombay High Court and subsequent decision of the Supreme Court in the case of 'Krishi Upaj Mandi Samiti'.

Summary:

Issue 1: Impugned Judgment by Tribunal
The appellant-Revenue challenged the judgment of the Customs, Excise & Service Tax Appellate Tribunal, Ahmedabad, which allowed the appeal of the respondent based on the decision of the Bombay High Court in the case of 'Maharashtra Industrial Development Corporation'. The appellant appealed feeling aggrieved by this decision.

Issue 2: Interpretation of Supreme Court Decision
The appellant heavily relied on the subsequent decision of the Supreme Court in the case of 'Krishi Upaj Mandi Samiti' regarding the exemption of service tax for activities performed by sovereign/public authorities under mandatory and statutory functions. The Court clarified that if such authorities perform services not in the nature of statutory activities and for consideration, service tax would be leviable.

Issue 3: Remand and Directions to Tribunal
The Court quashed and set aside the impugned judgment and order of the Tribunal, remitting the appeal back to the Tribunal for a fresh decision. The Tribunal was directed to consider the effect of the Supreme Court's decision in 'Krishi Upaj Mandi Samiti' concerning the activities carried out by the Gujarat Industrial Development Corporation under the Gujarat Industrial Development Act, 1962.

Issue 4: Timeframe for Tribunal's Decision
The Tribunal was given a period of six months to complete the exercise of reconsidering the case in light of the Supreme Court's decision in 'Krishi Upaj Mandi Samiti'.

Conclusion
The Court disposed of the appeals and pending applications with the direction for the Tribunal to reevaluate the case based on the legal principles established in 'Krishi Upaj Mandi Samiti' within the specified timeframe.