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TMI Blog2017 (10) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... leaves no doubt, that the activity of toll collection by the Respondents was not on behalf of NHAI/ MSRDC but on their own account once they had secured the right to collect the toll. The activity of NHAI/ MSRDC is of developing, maintaining and management of national state highways which is a statutory function. They have not been engaged in the said activity as business. In such case it cannot be said that the Respondents has been providing auxiliary service to any business. NHAI/MSRDC is engaged in sovereign function and not into any business activity. It has been held in catena of judgments of Tribunal that NHAI/MSRDC is not into business activity. For this reason the Respondents cannot be said to be engaged in rendering business auxiliary services to any person. Commission Income - Held that: - The Respondent's case is not even concerned with charging commission from NHAL or MSRDC - The toll collection is not being done on commission basis or in lieu of any remuneration. All the proceeds of the toll collection belong to the Respondents with no interference or right of NHAI/ MSRDC. The income so generated is their own business income and NHAI/ MSRDC has no right over suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s MEP were issued show cause notice dt. 23.10.2012 on the ground that as per the terms of the tripartite agreement signed between the MSRDC, M/s IRBPL and Respondent, it is observed that the Respondent are authorized to collect toll by the MSRDC Ltd. on its behalf subject to fulfilling of the conditions therein. The Respondent's annual report for the period 2007 07 to 2011 12 declares its revenue as income from 'toll collection'. The Respondent have undertaken the services of collection of toll for the period mentioned in the contract on behalf of corporation for which they were, as per the contract terms, allowed to retain part of the toll collected as consideration for such service provided to the corporation which is a taxable service falling under the category of Business Auxiliary Service as defined in Section 65 (105) (zzb) of the Finance Act, 1994 by collecting Toll on behalf of MSRDC. Accordingly proposed to demand service tax alongwith interests and penalty. The adjudicating authority set aside the demand and penalties proposed. Hence the present appeal. In case of Respondent M/s Ideal Road Builders (IRBPL) they were also collecting toll from various collecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner has not been accepted and has been appealed against before the Hon ble Supreme Court. That the decision of the Tribunal in case of Ideal Road Builder Private Ltd. - 2013 (31) S.T.R. 350 (Tri. - Mumbai) is distinguishable as the agreement was between the State Authority and concessionaire was for the construction of road and the contractor was authorized to collect the toll. Since the entire activity was in the form of BOT agreement no service tax was payable which is exactly as per Para 4 of the Circular dt. 22.02.02012. That the observation of the Chief Commissioner, Mumbai II that the issue is squarely covered by the observation of the tribunal in Para 4 in case of Ideal Road Builders Pvt. Ltd as reported in 2012 (57) STR 57 (TRI) appears to be well founded. He prays for setting aside the impugned order. Similar arguments has been made in respect of Resondent M/s IRBPL. 3. Shri A.R. Krishanan, Ld. Counsel appearing on behalf of the Respondents submitted that the Respondents are not liable for payment of service tax. He submitted that the Respondents has secured rights to collect toll for different sections of Highways on the basis of competitive bids from National ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Auxiliary Service and submits that none of the clause is applicable in the present case. He also submits that the Appellant has placed reliance on Para 3 of the Board Circular dt. 22.02.2012 which is as under : 3. However, if the SPV engages an independent entity to collect toll from users on its behalf and a part of toll collection is retained by that independent entity as commission or is compensated in any other manner, service tax liability arises on such commission or charges, under the Business Auxiliary Service [section 65(105) (zzb) read with section 65(19) of the Finance Act, 1994]. He submits that the reliance on aforesaid Para is wrong as the same is not applicable in the instant case. They do not collect toll on behalf of NHAI/ MSRDC as explained in above Para. The toll retained by them is profit on their own account and there can be loss also. The toll collected and retained is not in the nature of fee or commission or compensation or commission from NHAI/ MSRDC. He submits that as may be seen from the documents even the NHAI/ MSRDC considers activity of Respondent as toll collection and hence the reliance on Para 3 of the said circular is not correct. That as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the demands are time bar as the non-payment of service tax on such transactions has been known to the department and various judgments has been passed in the favour of parties. That the demand of only ₹ 10,30,41,783/- computed after reducing the overstated amount is only within the normal period of limitation. Also since the issue involved is not of suppression but of interpretation, therefore no penalty is imposable against the Respondent. In case of Respondent M/s IRBPL similar arguments has been advanced. It is submitted that they have not represented MSRDC or acted as agent of MSRDC to collect toll. They have acquired right to collect toll in auction for an upfront lump sum payment and hence the same cannot be considered as service. Apart from merits they also pleaded that the revenue has not challenged the Order in- Appeal on the grounds of limitation of time. Hence the Appellant- Revenue's appeal also fails on limitation/ time barred demand. They relied upon decisions in case of CCE Vs. Cus., Vapi Vs. Aunde Faze Three Auto Fab (2009) 246 (ELT) 324 (Tri Ahmd.) and CCE, Chennai Vs. Meco Tronics (P) Ltd. (2003) 159 ELT 628 (Tri Chennai). That there is nothing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry service means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) procurement of goods or services, which are inputs for the client; or Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, inputs means all goods or services intended for use by the client; (v) production or processing of goods for, or on behalf of, the client; (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any information technology service and any activity that amounts to manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In such view of the Tribunal we are unable to appreciate that the Respondent is rendering any 'Business Auxiliary Service'. Thus we are in agreement with the judgments cited supra by the Respondent and hold that the Respondent is not rendering any business auxiliary service. We also find that the Respondent's case is not even concerned with charging commission from NHAL or MSRDC unlike the judgments cited above. They stand on better footing than the cases cited by the Counsel for the Respondents as in the present case they had secured the right to collect the toll from NHAI/ MSRDC in a bid for lump sum amount. This amount is to be paid to NHAI/ MSRDC irrespective of any quantum of toll collection. The toll collection is not being done on commission basis or in lieu of any remuneration. All the proceeds of the toll collection belong to the Respondents with no interference or right of NHAI/ MSRDC. The income so generated is their own business income and NHAI/ MSRDC has no right over such toll collection. The toll is not collected by the Respondents as representative or agent of NHAI/ MSRDC nor any commission in terms of quantum of amount or percentage is charged by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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