9911796707
TMI Blog2011 (5) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... ement - Held that: under the Concession Agreement, STPL was collecting toll charges on sections of NH-5 and NH-9 in the capacity of 'Concessionaire' and not any agent of CIDBI - Decided in favour of the assessee - ST/33, 63 & 938 OF 2009 AND 1227 OF 2010 - 368, 371 OF 2011 - Dated:- 12-5-2011 - P.G. CHACKO, B.S.V. MURTHY, JJ. C.T. Krishnamurthy and R. Muralidhar for the Appellant. R.K. Singla for the Respondent. ORDER P.G. Chacko, Judicial Member. ‑ In the appeals filed by M/s. Swarna Tollway (P.) Ltd (hereinafter referred to as 'STPL' or 'the assessee'), the main question arising for consideration is whether they are liable to pay service tax under the head, 'Business Auxiliary Service' on the toll collected by them from the users of certain sections of certain Highways under a 'Concession Agreement' during the period of dispute. The appeal filed by the Revenue involves a minor issue relating to penalty. 2. It is necessary to provide a factual background for the demand of service tax on the assessee. The Central Government (Ministry of Road Transport and Highways) had authorized the National Highways Authority of India (NHAI for short) to impro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement, dated 19-12-2000 further laid down that CIDBI shall (a) design, engineer, finance, procure and construct all the works included in the scope of the project in accordance with the Concession Agreement; (b) upon completion of the strengthening and widening to four-lane Highways, manage, operate and maintain the Highways and regulate the use thereof in accordance with the terms of the Concession Agreement; (c) upon completion and opening of the Highways to traffic, levy, demand, collect and appropriate the fees from users of the Highways and regulate traffic on the Highways. The Agreement also entitled CIDBI to grant of project subsidy of Rs. 167.5 crores to be disbursed fully during the construction period. It also prescribed that the project costs to be reflected in the Concession Agreement should be Rs. 759.87 crores. The Agreement was to continue to be in force till execution of the Concession Agreement. Clause 5 of the Agreement, dated 19-12-2000, which is relevant to the present case, authorized CIDBI to transfer all rights, benefits, interests, duties and obligations under the Agreement to a "Special Purpose Vehicle" (SPV) to be constituted by CIDBI either solely or joi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intly with other parties promoted and incorporated the Special Purpose Vehicle to design, engineer, finance, procure, construct and operate and maintain the Project on BOT basis in accordance with the provisions of the Concession Agreement and that NHAI accepted the SPV in the place of CIDBI in relation to the Concession Agreement. A few relevant provisions of the, Assignment Agreement are reproduced below: "2.1 As agreed between NHAI and CIDBI under the provisions of Concession Agreement, CIDBI hereby assigns and transfers the Concession Agreement in favour of SPV and SPV hereby unconditionally agrees to accept the said assignment/transfer of the Concession Agreement and undertakes to execute/perform the Concession Agreement as if the said agreement was entered between NHAI and SPV. 2.2 NHAI agrees to the aforesaid assignment of the Concession Agreement by CIDBI in favour of SPV and with the execution of the Assignment Agreement, SPV shall be deemed to be the Concessionaire under the Concession Agreement. 2.3 With the execution of this Assignment Agreement, NHAI and CIDBI hereby releases each other from their respective rights, duties and obligations under the Concession Agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce tax and education cess against the assessee under section 73(1) of the Finance Act, 1994, directed them to pay interest thereon under section 75 of the Act and imposed penalties on them under sections 76, 77 and 78 of the Act. The assessee's appeal No. ST/938/09 is directed against the Commissioner's order. 8. Show-cause notice, dated 6-10-2009 was issued to STPL for recovery of service tax on the toll charges collected at Nandigama-Ibrahimpatnam section of NH-9 during the period from 11-9-2004 to 31-3-2009, imposition of penalties etc. This show-cause notice was adjudicated upon by the Commissioner confirming the demand of service tax and education cess against the assessee under section 73(1) of the Finance Act, 1994, demanding interest thereon under section 75 of the Act and imposition of penalties on the party under sections 76, 77 and 78 of the Act. This order of the Commissioner is under challenge by the assessee in appeal No. ST/1227/10. 9. After examining the records, we note that the main allegation of the department against the assessee was correctly and concisely stated in one of the impugned orders as follows: "The show-cause notices levelled allegation on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal highways i.e. NH 5 and NH 9. If the learned Counsel's argument that STPL was the concessionaire is true, the Government of India would have authorized STPL to collect the toll but the Government had authorized CIDBI only. Consequently, the STPL is only an agent to collect toll on behalf of CIDBI. With the result, the toll collection by STPL amounts to Business Auxiliary Services only. Consequently, they are liable to pay service tax on the toll charges collected by them. Further, it is noted that STPL has made two payments to the tune of Rs. 3,00,00,000 (Rupees Three Crore) and Rs. 70,18,113 (Rupees seventy lakh eighteen thousand one hundred and thirteen) to M/s. CIDBI towards consultancy fee and pre-incorporation charges respectively. From this also, it is prove that the STPL is an agent and the CIDBI is still a concessionaire. 35. Further, their argument that income-tax department recognized them as concessionaire, that CIDBI had issued a letter recognizing them as concessionaire etc., all those things will nor stand before the notification issued by the Ministry of Road and Transport and that too when the Ministry's Notification came after the Assignment Agreement entered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter is on the following subject: "Tada-Nellore (Km. 52.80 to 163.60) on NH -5 Nandigama-Ibrahimpatnam (Km. 217 to 252) on NH -9 in Andhra Pradesh, BOT Project - Concessionaire - Service tax - Clarification - reg. " The operative portion of the letter reads as under: "4. On incorporation of STPL (the SPV), the Concession Agreement was assigned by way of an Assignment Agreement, dated 29-6-2001 to Swarna Tollway (P.) Ltd. (SPV) by CIDBI and NHAI as intended in Concession Agreement (Recital D). On execution of Assignment Agreement, CIDBI ceased to be the Concessionaire and in its place, STPL (i.e. the SPV) has become the Concessionaire for the above said BOT project. As such, M/s. Swarna Tollway (P.) Ltd. is "the Concessionaire" and not "CIDBI". (underlinings added) 17. It is significant to note that NHAI, being a party to the Concession Agreement and the Assignment Agreement, accepted STPL as the 'Concessionaire' and declared so in the above letter in unequivocal terms. Upon receipt of the letter from NHAI, the Commissioner of Service Tax ought not to have any doubt lingering in his mind about the status of the assessee in relation to the Concession Agreement. 18. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
