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TMI Blog2020 (7) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... angibility as well as specified recipients, renders the scope for such a levy to be well nigh impossible. It can be seen from the laws enacted for commodity taxation that there is a reiteration of the taxability of government transaction; such a mandate to tax is conspicuously absent in Finance Act, 1994. Normally, there would be no cause for such eventuality as the discharge of sovereign responsibility is not characterised with corresponding consideration. The negation of the claim flows from certain responses of the adjudicating authority to the claims of the appellant. We are constrained to take note of the solecism evident in those findings. Tax officials are creations of taxing statutes and not only required to be diligent in enforcing levies contemplated in those statutes but also be soldiers in defence of rule of law. Incorrect sequencing of the hierarchy of findings underlines disregard for other taxing statutes and even of the Constitution itself which may be attributable either to ignorance or to egregious disrespect. A perusal of Part XII of the Constitution of India would have been sufficient to appreciate that levy, collection and appropriation are all employed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd was held to be liable for recovery from the Traffic Manager on whom penalty of ₹10,000/- under section 77 of Finance Act, 1994 was also imposed, that functionary is before us. 2. From the records, it is seen that Mumbai Port Trust, along with Central Excise authorities and Central Railway, was vested with the responsibility under Mumbai Municipal Corporation (Levy of Octroi) Rules, 1965 to collect octroi on entry of goods for consumption and use in the municipal area within their respective operational jurisdictions for which 3% of such collections was retained as recompense. The tax liability was computed on the retained amount of ₹186,11,14,303/- as the ostensible consideration for having rendered service, taxable under section 65(105)(zn) read with section 66 of Finance Act, 1994 until 30 June 2012 and under section 66B read with section 65B(44) of Finance Act, 1994 for the period thereafter, to Municipal Corporation of Greater Mumbai (MCGM) between 1 st October 2007 and 31st January 2013. It is on record that though, in the pre-negative list regime, taxability could also have arisen under section 65(105)(zzb), taxing business auxiliary service , of Finance A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he adjudication despite the absence of the noticee during the personal hearing while attesting to having taken all the objections into consideration. 5. According to the adjudicating authority, the taxability, founded on two conditions specified in the original definition and having to rely only one of these after 1st July 2010, was inevitable as the amount withheld from the Municipal Corporation was for an activity undertaken, admittedly, by a port and in relation to goods that could be taken out only after discharge of octroi liability. For the confirmation relating to the period after 1st July 2012, the adjudicating authority, while taking note of the exclusion of services provided by government/local authority, held the noticee to be neither but, on the contrary, being by a trust, is a commercial organisation and that section 66F(1) of Finance Act, 1994, demarcating the rendering of main service from the provision of such services that enable such provider in rendering their output service, distanced them from any claim to sovereign function of tax collection. 6. To deny coverage of the clarification offered in circular no. 897/7/2006-ST dated 18 December 2006 and no. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons Act, 1949, read with Pune Municipal Corporation Octroi Rules, 2008. The levy of Octroi, it appears, to not figure in the realm of the budget announced by the State Government of Maharashtra and thus, not to levy administered by the State Government. The decisions of the Tribunal, on the aspect of eligibility for this exemption, was denied applicability with the observation that 3.31. I further find that reference to this notification by the Hon ble Tribunal in the case of UTI Technology Service ltd. and Intertoll India Consultants (P) Ltd. cannot be taken as findings of the Tribunal as the Tribunal did not examine the exact wording of the notification to come to the conclusion. Therefore these judgements with reference to this notification should be treated as per incuriam. 8. As we shall presently be taking up the issue of levy of octroi by municipalities, the views of the adjudicating authority will necessarily be subject to appropriate analysis then. Insofar as the declaration of the adjudicating authority on the decisions of the Tribunal are concerned, even disdainful silence in response to the revealed ignorance, demonstrated lack of grace and blatant want o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Tribunal in Homa Engineering Works v. Commissioner of Central Excise, Mumbai [2007 (7) STR 546 (Tri-Mumbai)] insofar as the scope of the levy is concerned and that exclusion of sovereign functions has been upheld by the Tribunal in UTI Technology Services Ltd v. Commissioner of Service Tax, Mumbai [2012-TIOL-73- CESTAT-MUM]. The applicability of notification no. 13/2004-ST, he argues, has also been confirmed by the decision of the Tribunal in Intertoll India Consultants (P) Ltd v. Commissioner of Central Excise, Noida [2011 (24) STR 611 (Tri-Del)]. We take note that the latter two decisions were also before the adjudicating authority in that proceeding. 11. Learned Authorised Representative drew our attention to the several opportunities afforded to the appellant in adjudication proceedings and the lack thereof in participation which, according to her, warranted discarding of the plea that principles of natural justice had not been complied with. Since that aspect has not been seriously pressed on behalf the appellants, we are in agreement. On behalf the respondent, it is submitted that the decision of the Tribunal in re Homa Engineering Works does not advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined to note that the decision of the Hon ble High Court of Gujarat in re Adani Enterprise Ltd, having made it abundantly clear that 10. Considering the above facts and circumstances of the case, in our view, no question of law arises.. and, thus, ruling out maintainability under section, has not rendered a decision on the nature and scope of the impugned taxable service. Learned Authorised Representative also placed before us the decision of the Hon ble High Court of Rajasthan in Municipal Board v. Industrial Tribunal and Labour referred to supra in our summary of the findings of the adjudicating authority to which we shall presently address ourselves. 14. Learned Counsel countered the reliance on the decision in re Kandla Port Trust by pointing out that the decision in re Homa Engineering Works was not argued in the proceedings before the Tribunal. 15. From a perusal of the impugned order, it is apparent that the adjudicating authority has proceeded on the assumption that the collection of octroi was the service rendered by the appellant and the sole aspect that remained in dispute was the fitment within the proposed taxable service. In doing so, the plea of havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not the latter and in the interest of revenue administration, we do hope that it was not the former. We do, however, believe that our apprehensions will be comprehended. 17. The adjudicating authority has, in casual manner, discarded the appellant from the scheme of governance by characterising them as a trust. Perhaps, he was unaware that the appellant, entrusted with the conservation and operation of the harbour in Bombay (as it then was) as a successor of the several departments of the pre-independence provincial administration, including the Customs, was constituted under the Bombay Port Trust Act, 1879 almost contemporaneously with the administration of Calcutta (as it then was) Port and that the Indian Trusts Act, 1882, enacted subsequently, was intended to regulate the functioning of only private trusts. The scope of entrustment with the appellant, from inception and even after coverage under the Major Port Trusts Act, 1963 until much later, did not appear to have been appropriately appreciated in the impugned order. These were properties belonging to, and facilities offered by, the State, entrusted for administrative convenience with the Board of Trustees designated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty fourth Amendment) Act, 1992 incorporating Part IX and Part IXA widely known as the Panchayati Raj Institutions. These reforms provided for three tier third level institutions for governance in the country with independent State Election Commissions and State Finance Commissions-the one for constitution of these bodies and the other for appropriate financial devolution. Thus, the Constitution itself permitted the states to assign some of its taxing powers to these third level institutions. The adjudicating authority has erred in ignoring that the circumstances in which municipalities may have been perceived as industry had long since ceased to exist. 20. Considering these flaws of inferences in the impugned order leading to the conclusion that collection of octroi by the appellant, we, on examination of the legal framework, finding it useful to restate the foundations. That levy and collection of tax is a sovereign privilege and must have authority of law enacted by the Union Parliament or the legislatures of constituent states is not in dispute. It is also not in doubt that List II of the Seventh Schedule in the Constitution of India empowers the legislatures of the constitue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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