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TMI Blog2021 (5) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... ow made by the Southern Railways is in violation of the provisions of the CGST Act and therefore, the writ petitions are to be allowed. The facts admitted are that the land belongs to the Southern Railways, the writ petitioners were given license to run vehicle parking and while entering into an agreement of license, the Southern Railways, in clear terms, stated that the contractors are liable to pay taxes as applicable under the CGST Act. In turn, the contractors are also liable to pay the service tax, if they are falling within the ceiling prescribed under the Act. Thus, the Railway has to pay tax for the services rendered to the contractors by collecting license fees and the contractors, in turn, have to pay service tax for collection of parking fee from the end users - This being the pattern of liability to pay tax, which is contemplated under the provisions of the Act, there is no question of granting exemption to anyone of the persons, either the Railways or the contractors, who all are licensees and permitted to run the vehicle parking areas and therefore, their liability under the provisions of the Act, is unambiguous. In the present cases, liability of the licensees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of the CGST Act enumerates definitions. Section 2 (102) defines:- services means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; [Explanation : For the removal of doubts, it is hereby clarified that the expression services includes facilitating or arranging transactions in securities;] 4. Let us now consider Chapter III levy and collection of tax. Section 7 denotes the scope of supply, which reads as under:- 7. Scope of supply. (1) For the purposes of this Act, the expression 'supply' includes (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; [and] (c) the activities specified in Schedule I, made or agreed to be made wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate from such authority, from any of the following, namely:- (i) an architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or (ii) a chartered engineer registered with the Institution of Engineers (India); or (iii) a licensed surveyor of the respective local body of the city or town or village or development or planning authority; (2) the expression construction includes additions, alterations, replacements or remodelling of any existing civil structure; (c) temporary transfer or permitting the use or enjoyment of any intellectual property right; (d) development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software; (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; and (f) transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued detailed approach paper for implementation of Goods and Services Tax (GST) on the subject of Traffic Commercial Directorate in proceedings No.TCII/ 2910/2017/GST/2 dated 09.06.2017, wherein Clause 3 stipulates renting of space and the same reads as under:- 3. Renting of space-ATM/STDPCO/ Shops/Parking, catering stalls operated by licensee: (i) The place of supply will be the place where space is located and place of supplier (Railways) will also be the same as Railways intend to register in every State for GST. In this case CGST+SGST/UTGST will be applicable. (ii) Zonal Railways shall be issued instructions to issue Money Receipt as tax invoice accordingly and charge applicable GST. (iii) The details of the money receipt shall be fed into the CRIS system for filing of GST return. Generation of tax complaint invoice is mandatory. At present this activity is treated as 'renting of immovable property' so applicable rate is 18%. 11. The above Clause deals with parking also. 12. With reference to provisions of the CGST Act as well as the consequential Circulars issued by the Railway Board, another Circular was issued to all the General Manag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Tax and Customs, it is made clear that license, rental, lease amounts to supply and as per Schedule II of the Act, license to occupy the land and renting of an immovable property, are also supply of services. 14. In the above context, let us consider the facts relating to the writ petitions on hand. 15. It is an admitted fact that all the writ petitioners are Contractors, who were granted license to run parking areas for vehicles in the Railway premises by the Southern Railway. All the writ petitioners participated in the tender process and were successful in the tender and entered into an agreement with the Southern Railway, agreeing certain terms and conditions stipulated. 16. The agreement for manning the vehicle parking stand in Railway Stations were admittedly signed by all the writ petitioners, who all are Contractors and all the writ petitioners could pay the license fee as per the terms and conditions. The agreement Clause (8) contemplates that:- 8. (i) I/We shall during the continuance of this license agree to pay to the Administration for the use of the said premises under the conditions of this license an annual/quarterly licensee fee of ₹ 2,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 32 of the CGST Act and sub-clause (2) to Section 32 stipulates that no registered person shall collect tax except in accordance with the provision of this Act or the Rules made thereunder . 21. In the present cases, even before the introduction of the present CGST Act, the Contractors were paying the taxes based on the erstwhile Act, mainly Service Tax Act. After the implementation of the CGST Act, when there is prohibition of unauthorised collection of tax, the demand now made by the Southern Railways is in violation of the provisions of the CGST Act and therefore, the writ petitions are to be allowed. 22. One of the contention raised is that presuming that the respondents are entitled to collect GST under RCM, then also they can do it only in the case of services supplied by the Central Government by way of renting of an immovable property as per the notification dated 25.01.2018. 23. As far as the present writ petitions are concerned, the respondents had admitted that they are treating 'Parking' as 'Renting of an immovable property', which is against the provisions of the GST Act. In other words, as per the agreement, it is renting of an immovable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e licensee was also responsible under the licence agreement to operate the subject facility by charging the rate from users, as may be approved in advance by AAI. 15. Albeit, it is true that the appellant deposits a licence fees of ₹ 2,66,797 per month to AAI but it collects the required fees from the users of the facility and provides all facilities to such customers. Section 65 clause (105)(zzm) of the Finance Act, 1994 defines taxable service to mean any person, by Airports Authority or any person authorised by it, in an airport or a civil enclave. It is thus crystal clear that the appellant being a person authorised by AAI to provide service in express terms and conditions, it becomes liable to pay such tax as it was an authorised person to provide taxable service and collect the admission ticket charges on a contract basis. 16. Under the terms and conditions set out hereinbefore of the agreement the appellant is authorised to provide all the services as mentioned therein and, therefore, as per the statutory definition the appellant steps into the shoes of AAI for the service provided on the basis of the authorisation and becomes liable to pay such taxes in te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, more specifically, under Section 32, there is no reason whatsoever to make a demand for recovery of GST from the writ petitioners. Such a collection of tax is unauthorised and the above judgments clarify that the collection of tax in such circumstances, more specifically, from the licensees are impermissible. 28. In these cases, the respondent-Railways have treated the parking as rented out of property and therefore, the same would not fall under the provisions of the CGST Act and the writ petitioners are not liable to pay the tax. 29. Learned counsel appearing on behalf of the Southern Railways, objected to the said contentions of the learned counsel appearing on behalf of the writ petitioners, by stating that all the agreements and precontract proposals were signed by the writ petitioners, agreeing to pay the taxes as applicable under the CGST Act. When the contractors have signed the pre-agreement proposals, even before entering into a contract, and thereafter, entered into a contract by signing the agreement, now cannot turn around and say that they are not liable to pay the service tax as applicable under the provisions of the CGST Act. 30. In this regard, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no ambiguity in respect of the transactions made with reference to the facts of the present writ petitions. 38. The facts admitted are that the land belongs to the Southern Railways, the writ petitioners were given license to run vehicle parking and while entering into an agreement of license, the Southern Railways, in clear terms, stated that the contractors are liable to pay taxes as applicable under the CGST Act. In turn, the contractors are also liable to pay the service tax, if they are falling within the ceiling prescribed under the Act. Thus, the Railway has to pay tax for the services rendered to the contractors by collecting license fees and the contractors, in turn, have to pay service tax for collection of parking fee from the end users. 39. This being the pattern of liability to pay tax, which is contemplated under the provisions of the Act, there is no question of granting exemption to anyone of the persons, either the Railways or the contractors, who all are licensees and permitted to run the vehicle parking areas and therefore, their liability under the provisions of the Act, is unambiguous. 40. Considering the facts and circumstances, this Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Thus, the arguments advanced based on the above mentioned judgments, cannot be held in favour of the writ petitioners and this Court is bound to go by the provisions of the CGST Act, which was implemented with effect from 01.07.2017. 45. As discussed above, the provisions of the CGST Act is crystal clear that the services rendered are liable for payment of service tax and more specifically, with reference to Section 7 r/w Schedule II, the services rendered by the Railways to the writ petitioners/contractors and the writ petitioners/contractors to the end users, are falling within the scope of Section 7 r/w Schedule II of the CGST Act and therefore, all the writ petitioners are liable to pay tax, as applicable and as demanded by the Southern Railways. 46. This Apart, the writ petitioners have agreed to pay the taxes even during pre-contract, when the proposals were released and therefore, now they cannot turn around and seek exoneration from payment of service tax as applicable. 47. Thus, it is made very clear that the Southern Railways is liable to pay service tax for the license fee collected from the respective contractors and the respective contractors are liable to ..... 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