9911796707
TMI Blog2024 (6) TMI 1182X X X X Extracts X X X X X X X X Extracts X X X X ..... and also for personal hearing. The matter requires to be remanded to the adjudicating authority who is directed to consider the issue afresh after giving an opportunity to the appellant to furnish evidence and for personal hearing - appeals are allowed by way of remand. - HON BLE MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) and HON BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) For the Appellant : Shri R. Balagopal, Consultant For the Respondent : Shri Harendra Singh Pal, Authorised Representative ORDER Order : Per Ms. SULEKHA BEEVI C.S. The issue involved in all these appeals being the same, they were heard together and are disposed of by this common order. 2. Brief facts are that the appellants are M/s.Velur Town Panchayat Mohanur Town Panchayat and are registered with the Service Tax Commissioerate. It appeared that the appellant had not paid appropriate service tax and not filed periodical ST-3 returns during different periods. Accordingly, show cause notices were issued to the appellant for different periods proposing to demand service tax on the parking fee, (daily/weekly market), advertisement fee, fee for bays and other receipts in the bus stand, fees on slaughter houses, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution. Such fees and charges being welfare measures and also functions carried out as per the Constitution cannot be subject to levy of service tax. The demand of service tax on such amounts cannot sustain and has to be considered on the basis of the above judgment of Hon ble High Court as well as the applicability of the State Legislature while providing such services. 3.2 Some part of the demand is raised on reverse charge basis. The appellant is not liable to pay service tax under Reverse Charge Mechanism basis as the service recipient is liable to discharge the service tax. 3.3 The Ld. Consultant put forward arguments on the ground of limitation also. It is submitted that though the appellant being a local authority which is a wing of the Government cannot be saddled with the guilt of suppression of facts with intent to evade payment of service tax. The municipality is by elected representatives of the community and therefore the allegation that the municipality has suppressed facts with intent to evade payment of service tax is without any basis. It is submitted that the demand raised invoking the extended period therefore cannot sustain and the same has to be considered wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Municipality / Corporation. It was held that Municipalities (local authority) were rendering such services as sovereign function and therefore the amounts received is outside the purview of levy of service tax. In the said judgment, the Hon ble High Court considered the liability to pay service tax for the period prior to 01.07.2012 as well as after 01.07.2012. The relevant paragraphs of the judgment in the case of Cuddalore Municipality supra reads as under:- 58. As far as renting of immovable property is concerned, though under Rule 2(1)(d)(E) of the Service Tax Rules, 1994, service tax is payable by the service provider, it has to be held that if such services are provided by a Government or Local Authority, they are exempted under Section 65D(1)(a) of the Finance Act, 1994 as amended and as in force from 1-7-2012. Only ancillary service provided by a third party towards renting of immovable property of a non-governmental or local body will be liable to pay service tax like any other service provider. Therefore, service tax is payable by the service provider himself. 59. That apart, it is seen that some of the services provided are also exempted under the Mega Exemption No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved that it is open to the local body to pass on the burden to the recipient of the service. It is necessary to note that among the petitioners in that batch of writ petitions, there were a few local bodies also. That is why, in R.Nambi vs. Tenkasi Municipality (2015) (37) S.T.R 696 (Mad.), a learned Judge of this Court observed as follows : 13. At the out set it has to be pointed out that the petitioner it not a service provider. The first respondent Municipality is the service provider, who has been registered with the Department. The onus is on the first respondent Municipality to remit the service tax. In turn, the first respondent Municipality has demanded the same from the petitioner, who is their licensee in respect of four contracts, wherein the petitioner has been given license to collect fees. Furthermore, the petitioner has not challenged the validity of the provisions of the Finance Act nor the notification issued by the second respondent and in such circumstances a challenge to a demand notice issued by the service provider under whom the petitioner is a licensee has to necessarily fail. Nevertheless, since this Court heard the learned counsel for the petitioner in g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that I respectfully follow these binding precedents. 7.4 It is to be noted that the Hon ble High Court in the case of Madurai Corporation has followed the decision of the Hon ble High Court rendered in batch case of G.V. Matheswaran vs. the Union of India [2014- TIOL-2545-HC-MAD-ST]. In the case of G.V. Matheswaran the constitutional validity of the levy of service tax on Renting of Immovable Property Service was under challenge. The main ground raised by the petitioner therein was that it is a tax on immovable property and that the Centre has no power to levy tax for the reason that immovable property (land) falls within the State list. There were various decisions passed by other High Courts upholding validity of the provisions of Section 65(105)(zzzz) and Section 65(90a) of the Finance Act, 1994. i. Shubh Timb Steels Ltd. Vs. Union of India [2011 (37) GST 46 (P H)] ii. Utkal Builders Ltd. Vs. UOI [2011 (22) STR 257 (Ori.)] iii. Entertainment World Developers Ltd. Vs. UOI [2012 (25) S.T.R. 231 (M.P.)] iv. Home Solution Retail (India) Ltd. Vs. UOI [2011 (24) S.T.R. 129 (Del.)], Home Solution II In these cases there was no specific discussion upon the issue whether local authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rary view has been taken by another learned single Judge of this Court in another batch of writ petitions in W.P. (MD) Nos. 7599 of 2018 etc. batch, in its decision, dated 9-9-2020. According to him, in the said decision, it has been held that a Municipality is liable to pay Service Tax. 7. The learned Standing Counsel for the respondent would also submit that the decision of the Hon ble Supreme Court in the case of Krishi Upaj Mandi Samiti v. Commissioner of C.Ex. S.T., Alwar reported in 2022 (58) G.S.T.L. 129 = [2022] 135 taxmann.com 354 (S.C.) applies to the case of the petitioner and therefore, they are liable to pay Service Tax as demanded under the impugned order. However, the same is disputed by the Learned Counsel for the petitioner, who would submit that the said decision is not applicable to the case of the petitioner. The matter will have to be examined by the respondent. Admittedly, the Cuddalore Municipality case rendered by a Learned Single Judge of this Court referred to (supra) has not been considered by the respondents in the impugned order and therefore, necessarily the impugned order has to be quashed and the matter will have to be remanded back to the respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld. Counsel has argued on the ground of the limitation also. The assessee being a local authority, which is a wing of the Government, it cannot be said that assessee has suppressed facts with intent to evade payment of service tax. So also, there is no positive act of suppression alleged in the Show Cause Notice against these Municipalities. As the matter is remanded, we direct the Adjudicating Authority to consider the issue on limitation also. 9. The Department has filed appeal aggrieved by dropping or reducing the demands. In case the demand of service tax is sustainable, the Adjudicating Authority is directed to quantify after looking into the actual amounts received in respect of each services. All issues are left open. 10. In the result, the impugned orders are set aside. The appeals are allowed by way of remand to the Adjudicating Authority. Cross objections are disposed, accordingly. 7. In view thereof, following the decision in the above decisions, we are of the considered opinion that the matte requires to be remanded to the adjudicating authority who is directed to consider the issue afresh after giving an opportunity to the appellant to furnish evidence and for per ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
