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TMI Blog2021 (2) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... o make laws in respect of Entries 8 and 66 of the State List which cover production, manufacture, possession, transport, purchase and sale of intoxicating liquors and fees in respect of any of the matters in this List excluding fees taken in any court. We further note that to deal with intoxicating liquor is part of the State responsibility and it is in exercise of these privileges, State has exclusive rights to manufacture, possession, consumption, transport etc. of liquor within its territory and to grant licenses and permits to ensure compliance - in August, 2019, the Finance Act, 2019 was enacted amending Section 66B of the Act, to the effect that service tax was not leviable on services provided by the State Government by way of grant of liquor licenses against consideration in the form of license fee or application fee by whatever name called , during 01.04.2016 to 30.06.2017 along with this amendment the dispute regarding the leviability of service tax on fee paid to State Government in relation to alcoholic liquor for human consumption has come to an end and it is clear that service tax is not leviable on the said fees from April 2016 to June 2017. Specific inclusion of wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER The present appeal is directed against the impugned order dated 6.03.2020/18.03.2020 passed by the Commissioner of Central Tax, Bangalore whereby the learned Commissioner has confirmed the demand of ₹ 4,89,95,805/- along with interest under Section 75 of the Finance Act, 1994. The Commissioner has also imposed penalty of ₹ 10,000/- under Section 77(2) of the Finance Act 1994 and ₹ 4,89,95,805/- under Section 78 of the Finance Act, 1994. The period of dispute is from April 2016 to June 2017 and SCN was issued on 18.06.2018. 2. Briefly the facts of the present case are that the appellants are engaged, inter alia, in manufacture and sale of alcoholic beverages. Pursuant to the enquiry initiated by the DGCEI, Bangalore, Zonal Unit, a SCN dated 18.06.2018 was issued to the appellant, inter alia, demanding service tax of ₹ 17,77,85,108/- under reverse charge mechanism on the following fees paid to the State Excise department: (i) Brewery License Fee (ii) Bond Registration Renewal Fee (iii) Storage License Fee for CO2 (iv) Factory License Renewal Fee (v) Excise Staff Salary and Overtime allowance/charges (vi) Permit Fee (vii) B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusive privilege of trade in liquor on payment of such fee and on such terms and conditions as it can deem fit from time to time. Learned Counsel also submitted that there is no quid quo in the license fee and service, if any, rendered by the State Government. The license fee charged by the State Government is neither any tax nor fee, but it is the consideration charged by the State Government for parting with its privilege and granting it to licensee for manufacture and sale of liquor. He relied upon the Constitutional Bench of the Hon ble Supreme Court in the case of Har Shankar Vs Excise Taxation Commissioner, (1975) 1 SCC 737, wherein the Hon ble Apex Court held , that the licensee fee is not a fee properly so-called nor indeed a tax but is in the nature of the price of a privilege, which the purchaser has to pay in any trading or business transactions. It is his further submission that the license fee charged by the State Government is not subject to tax as the same is not for any service. Pursuant to the retrospective amendment vide Section 117 of the Finance Act, 2019, it became even more clear that no service tax is leviable or payable on the license fee paid to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Excise Staff Salary and Overtime charges are with respect to service provided by the State Government. For this submission, he relied upon the decision of the Hon ble Supreme Court in the case of Gupta Modern Breweries Vs State of J K and Others, (2007) 6 SCC 317 wherein it has been held that there is no quid pro quo between the staff s salary and service rendered. The Hon ble Supreme Court further held that the administrative charges recovered by the State are in the nature of tax. He also referred to Circular No.192/02/2016-ST dated 13.04.2016, wherein CBIC has clarified that taxes, cesses or duties levied are not consideration for any particular service as such and hence not leviable to Service Tax. Hence, he has prayed that no service tax should be levied on Excise Staff Salary and Overtime charges. Similarly, he has prayed that no service tax is payable on Storage License Fee for CO2. Learned Counsel also contested the penalties imposed on the appellant on the ground that when the demand itself is not sustainable, the question of imposition of penalty does not arise and further the issue involved is of interpretation of law and therefore penalty is not imposable. 5. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transport, purchase and sale of intoxicating liquors and fees in respect of any of the matters in this List excluding fees taken in any court. We further note that to deal with intoxicating liquor is part of the State responsibility and it is in exercise of these privileges, State has exclusive rights to manufacture, possession, consumption, transport etc. of liquor within its territory and to grant licenses and permits to ensure compliance. Further, we find that in August, 2019, the Finance Act, 2019 was enacted amending Section 66B of the Act, to the effect that service tax was not leviable on services provided by the State Government by way of grant of liquor licenses against consideration in the form of license fee or application fee by whatever name called , during 01.04.2016 to 30.06.2017 along with this amendment the dispute regarding the leviability of service tax on fee paid to State Government in relation to alcoholic liquor for human consumption has come to an end and it is clear that service tax is not leviable on the said fees from April 2016 to June 2017. Specific inclusion of word by whatever name called , the Legislature made it abundantly clear that any fee paid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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