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TMI Blog2022 (4) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... he activity of collecting toll is covered under the negative list of services. The Appellant has been provided with the Fee Collection Rights i.e., the right to collect toll tax and not to provide any service on behalf of NHAI. Further, the Appellant was not paid any definite collection charges or service charges for collecting the toll, therefore, the service provided by the Appellant by way of granting access to road on payment of toll charges is covered under negative list clause (h) to section 66D of the Finance Act, 1994. No tax is leviable in the scenario - Expounding the same and as per facts of the present case, the Appellant is not carrying out any activity for NHAI, in fact, NHAI is supplying rights to collect fees to the Appellant which falls within the ambit of 'goods'. Further, on receiving the right to collect toll, the amount that the Appellant is collecting from the users of the road squarely falls in the ambit of toll and thus, is not chargeable to service tax as per clause (h) of Section 66D of Finance Act, 1994 and accordingly, there is no liability of tax on the Appellant. Applicability of Circular No.152/3/2012 dated 22.02.2012 - HELD THAT:- As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayanpura Toll Plaza, Rithala, Udaipur Section) on NH 76 in State of Rajasthan. After receiving an information from Central Excise and Central Goods and Service Tax and Service Commissionerate, Udaipur that the financial documents including TDS Certificate, Balance Sheets, P L Account alongwith schedules, Income Tax Returns for the year 2014-15 were demanded from the appellant. On examination of those documents, Department observed that appellant had received ₹ 34,93,06,965/- on account of Toll charges (hereinafter called as Toll) and had paid ₹ 33,42,03,471/- of said amount to National Highway Authority of India (NHAI) thereby retaining an amount of ₹ 1,51,03,494/-. 2. Department formed an opinion that the appellants are providing business auxiliary services as defined under Section 65 (19) of Finance Act, 1994 to the users of their client NHAI but were not depositing the Service Tax. Accordingly vide Show Cause Notice No.55 dated 22.05.2020 service tax amounting to ₹ 23,37,772/- was proposed to be recovered alongwith the interest and the proportionate penalties. The said proposal was confirmed by the Original Adjudicating Authority, however, only for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecifically mentioned that the appellants were providing services to the users of Narayanpur Section on NH 76 High Way on behalf of NHAI who is the client of the service provider, the appellant. Relying upon Section 66 B and 68 of Finance Act, 1994 Commissioner (Appeals) has rightly concluded that the services provided by the appellant are covered under the provisions of Business Auxiliary service as defined under section 65 (19) (iv) of Finance Act, 1994, on behalf of the client as has otherwise been clarified by Boards Circular No.152/3/2012-ST dated 22.02.2012. The services of appellant have clearly been denied to be covered under negative list as prescribed under section 66 B of the Finance Act, 1994. Impressing upon the correctness of the said findings, the appeal in hand is hereby prayed to be dismissed. 6. After hearing the rival contentions, it is held as follows:- The moot point of adjudication is : whether the collection of toll under a contract executed by NHAI in favour of the appellant amounts to providing Business Auxiliary Service by the appellant ? 7. The demand against the appellant has been confirmed based on the findings that the appellants were no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever with the Authority and the relationship of master and servant or employer and employee shall be only between the Contractor and the personnel deployed by it. 9. Under clause 15 provision of infrastructure was absolutely appellants liability, even repair and maintenance thereof including the payment of electricity bill fuel other consumables were all at the appellants own cost. In addition, as per clause 17, appellant had furnished the performance security amounting to ₹ 5,51,75,963/- in favour of NHAI alongwith the Bank Guarantee. The said amount of security is equal to one month agreed remittance valid for a period of 14 months from the date of the contract. Clause 23 prescribes various other obligations of the contractor/ the appellant. The contract even gives rights to appellant as well as NHAI (both the parties to contract) to terminate the contract in case of Force Majure event subject to notice for the same. 10. The above clauses of the contract make it clear that NHAI has not appointed appellant as its agent. The contract is absolutely on principal to principal basis. There is opined no circumstance to hold that appellant was providing Business Auxiliary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 the respondents from NHAI/MSRDC. They are liable only to pay the bid amount instalment to NHAI/MSRDC irrespective of any collection which can in no way be said to be commission income. They have purchased the right to collect the toll in auction which in no way can be termed as rendering of service to NHAI or MSRDC. Rather the respondents in terms of the agreement are liable to pay the amount fixed at auction to the NHAI/MSRDC irrespective of the fact that such collection of Toll is profitable to them or not. This leaves no doubt that for the above reason also the Toll collection by the respondents is not arising from any Business Auxiliary Service . We further find that even M/s. NHAI and MSRDC do not consider the toll collection by the respondents on their behalf as commission agent. They consider the respondents as in business of toll collection and even tax is coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts of the case, there is no retention by the Appellant rather he has to pay a fixed amount on weekly basis to NHAI irrespective of any collection. Hence, the very basis on which ld. Adjudicating Authority has alleged that the Appellant has earned commission is held incorrect. 16. Further, the said circular is applicable when the collection of toll is made on behalf of NHAI and a part of toll collection is retained by the collection agency. However, in the current case, the Appellant was carrying out the said activity as an independent principal. No fixed amount has been retained by the Appellant, on the contrary, he is required to pay a fixed amount on weekly basis to NHAI. Thus, consideration is flowing from the Appellant to NHAI and not vice-versa. Therefore, the said circular is not applicable in the scenario and the department has erred in applying the circular in the present case. With reference to the same, in case of Commissioner of Service Tax v. Ideal Road Builders Pvt. Ltd. [2018 (12) G.S.T.L. 192 (Tri.- Mumbai), it was held:- The reliance placed by the Revenue upon Board Circular No. 152/3/2012-S.T., dated 22-2-2012 is not correct for the reason that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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