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TMI Blog2019 (11) TMI 1573X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether the service provided by the Appellant by way of issuing SOC-VRC to the various vehicle owners on behalf of the Regional Transport Offices of the State Government would be leviable to Service Tax under the category of BAS in terms of section 65(105) of the Act prior to 1 July, 2012. When the Commissioner in regard to the Appellant s own case for a subsequent period held that Service Tax cannot be levied under the category of BAS, which order of the Commissioner attained finality, the Department cannot be permitted to contend in this Appeal that Service Tax under the category of BAS can be levied upon the Appellant. It also needs to be noted that the Commissioner placed reliance upon the decision of Madhya Pradesh High Court in Smart Chip [ 2015 (7) TMI 886 - MADHYA PRADESH HIGH COURT ] and also upon the Circular dated 18 December 2006. In Smart Chip, a contract was entered into by Smart Chip and the State Government of Madhya Pradesh for carrying out various activities which were found to be covered under the category of BAS by the Department. The Tribunal found that the activity carried out by the assessee pertains to preparation of smart cards at the service centres in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fee directly on behalf of the Government from the concerned customers and would have no obligation to remit such amount to the Government. (iii) Taxes in the form of excise, sales tax and service tax or any other tax or levy under any law would not be applicable to the service nor to the obligations undertaken by Shonkh on behalf of the State Government. (iv) Shonkh may delegate and sub-contract any of the rights, duties and obligations under the Agreement with the prior permission of the State Government. 3. Consequently, the State Government issued a notification dated 27 November, 2002 inserting Rule 285B in the Maharashtra Motor Vehicle Rules, 1989 for issuance of SOC-VRC and levy of fee. As per this rule, an applicant would have to pay a statutory fee of ₹ 150/- for a smart card in addition to the fee specified in Rule 81 of the Central Motor Vehicle Rules, 1989. As per this rule, an applicant is required to pay ₹ 200/- for a smart card. Thus, in all, the statutory fee to be charged from an applicant for issuance of a smart card would be ₹ 350/- in the State of Maharashtra. 4. In terms of the agreement dated 30 November, 2002, Shonkh irrevocably ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. The Commissioner found that the Appellant was not a sovereign or public authority and the amount of ₹ 350/- collected by the Appellant per card was not deposited in the government treasury but was appropriated by the Appellant and was in addition to the statutory fee prescribed by statute collected by the Government. 8. Shri B.L. Narasimhan, learned Counsel appearing on behalf of the Appellant has made the following submissions to assail the order passed by the Commissioner: (i) The State Government was required to issue SOC-VRC as per the provisions of the Motor Vehicles Act read with the Motor Vehicles Rules and since this is a statutory function of the State Government, the same would not qualify as service/business by the Government; (ii) In this regard, reliance has been placed on the Circular dated 18 December, 2006 issued by CBEC, wherein it has been clarified that the activities assigned to and performed by a sovereign/public authority under the provisions of any law are undertaken as mandatory and statutory functions and cannot be treated as services provided for a consideration; (iii) The Appellant has not provided any service on behalf of the Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a service recipient in terms of the agreement. The Appellant had provided service to the applicants on behalf of the State Government and, therefore, the service provided by the Appellant would clearly fall under the definition of BAS as contained in section 65(19)(vi) of the Act; and (ii) The Circular dated 18 December, 2006, on which reliance has been placed by the Appellant, cannot come to aid of the Appellant since the Appellant is not sovereign or a public authority and the amount of ₹ 350/- collected by the Appellant for a smart card was not deposited in the Government treasury. 10. The submissions advanced by the learned Counsel for the Appellant as also the learned Authorised Representative of the Department have been considered. 11. To appreciate the rival contentions, it will be appropriate, at this stage, to refer to the relevant portion of the recitals contained in the agreement dated 30 November 2002 entered into between the State Government and Shonkh. The State Government had issued a tender notice for the project and Shonkh had responded by submitting a proposal and pursuant to issue of the letter of intent, the State Government agreed that Shonkh should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the said agreements dated 30 November, 2002 and 30 May, 2006. This notice came to be decided by the Commissioner by order dated 31 December, 2015. The Commissioner noticed that the issue that was required to be decided was as to whether the service provided by the Appellant by way of issuing SOC-VRC to the various vehicle owners on behalf of the Regional Transport Offices of the State Government would be leviable to Service Tax under the category of BAS in terms of section 65(105) of the Act prior to 1 July, 2012. The findings of the Commissioner in said order are reproduced below: "5.11 Now I have to examine whether the issue of Smart Card Based registration Certificates to the vehicle owner on behalf of the Govt. of Maharashtra and Gujarat is a taxable service under the category of Business auxiliary Service prior to pre negative list era. I find under the Motor Vehicle Act, 1988, it is the statutory/sovereign function of the State Government to issue Registration Certificate to the vehicle owner. The issue of RC is not in relation to any business rather it is issued as a statutory/sovereign function of the State Governments therefore the same cannot come under the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support this contention, learned Counsel has placed reliance upon a decision of Allahabad Bench of this Tribunal in Shri Niraj Prasad vs. CCE & ST, Kanpur Service Tax Appeal No. 3834 of 2012 decided on 17 July, 2019. In the aforesaid case, it was sought to be submitted by the Appellant that the Department cannot be allowed to discriminate between various assesses on the same issues. A view was taken that the centres of the Appellant would not be required to pay Service Tax under BAS, if Service Tax had been paid on the entire amount by the agency. This submission was made in view of the order dated 25 October 2012 passed by the Commissioner (Appeals), which order had attained finality. It is in this context that the Tribunal held that once the Department has permitted the order to attain finality, it cannot be permitted to contend that the Appellant should also be required to pay Service Tax on BAS and to arrive at this conclusion, reliance was placed on the decision of the Supreme Court in Damodar J. Malpani vs. CCE 2002 (146) E.L.T. 483 (S.C.), wherein it was held: "3. It appears from the records that several letters were written by the Appellants to the Excise Authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atel & Co's products were identical and were the outcome of an identical process, and that since the latter had been exempted from paying any central excise duty on the ground that their product was classifiable under Tariff Heading 24.04, the Appellants should get the same benefit. 6. At the hearing today we sought an explanation from the learned Counsel appearing on behalf of the Revenue Authorities as to why different stand had been taken in the cases of M/s. Chandulal K. Patel & Company and the Appellant. Since the matter had not been squarely dealt with on facts at any stage by any of the authorities below, it was not possible for learned Counsel to give us the reasons for drawing this distinction between the two manufacturers and differently classify what were alleged to be materially the same product. 7. In the circumstances we deem it appropriate to set aside the order of the Tribunal and remand the matter back to the Tribunal for considering whether the product and process followed by M/s. Chandulal K. Patel & Co. is the same as that of the Appellants' product for the chemical analysis if not already done. The Tribunal will thereafter consider the question of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove findings are contested by Revenue. The main objection is that in an arrangement between two private parties there is no question of discharging sovereign or statutory function. We note that this plea is misdirected and misconceived. Admittedly, the respondent is very much involved in execution of the project of smart card for vehicle registration. Though they are not executing the full project for Government of Maharashtra in terms of direct agreement with the Regional Transport Authorities, it is clearly an admitted fact that their work is directly linked to the preparation of smart cards which are essential to fulfill the statutory work of Government of Maharashtra. We find that the analysis of factual and legal position by the Original Authority cannot be faulted. We also examined the proposal made by the Revenue in the demand notice for tax liability of the respondent. We note that essentially the respondent were put to tax liability under sub-clause (vi) of Section 65(19) dealing with Business Auxiliary Service. The said sub-clause states "provision of service on behalf of the client". We are not very clear as to who is the client and who is the recipient of serv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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