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TMI Blog2024 (9) TMI 1359X X X X Extracts X X X X X X X X Extracts X X X X ..... se functions in the state for development of industry in the state. Once it is accepted that these are the statutory functions of the state, the same cannot be exigible to tax under the period prior to 01.07.2012 also. Further misc. receipts which are stated to be in respect of as sub- letting fees, subdivision charges, amalgamation fees, collateral fees are nothing but necessary for orderly regulation of industrial estate and are for of the infrastructural development activity only. It is an avowed statutory duty of the state to develop industry in the state and any charges collected for such making such development cannot be subjected to tax. The infrastructure up-gradation fund , transfer fees and other misc. charges in respect of in respect of as sub-letting fees, subdivision charges, amalgamation fees, collateral fees are necessary for maintenance, management and repairs of the industrial estate under Gujarat Industrial Development Corporation (GIDC), established under the Gujarat Industrial Development Act, 1962 and are not subject to service tax during the impugned period of either before or after 01.07.2012 - no service tax could be charged on the share of IUF which was col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 66B, and the appellant is therefore liable for the service tax on this amount. (b) Water Supply Charges: The appellant has been collecting water charges from business entities operating from plots allotted to them in the GIDC area for the supply of water. This activity is considered taxable under the category of support services of business or commerce or business support services. (c) Miscellaneous Receipts: The appellant collects various fees/charges such as sub-letting fees, subdivision charges, amalgamation fees, collateral fees, etc., from leaseholders operating businesses in the GIDC area. These charges represent additional consideration and were in relation to renting of immovable property, and are liable for service tax. (d) Transfer Charges: The appellant collects transfer fees from leaseholders as additional consideration during the transfer of property from one leaseholder to another. These transfer fees are deemed additional consideration related to the renting of immovable property and are subject to service tax. Accordingly following demands were raised against the appellant vide show cause notice dated 19.04.2017 which in total amounted to Rs. 2,44,32,267/- Period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest under Section 75 of the Finance Act, 1994 has been demanded and penalties under Section 76, 77 and 78 has also been imposed. Now the appellant is before us against the impugned order. 3. Shri Jigar Shah, learned Counsel appeared on behalf of the appellant along with Shri Amber Kumarawat, Advocate. The learned advocate has argued that Service tax is leviable only on the 'gross amount charged' by the service provider for the 'services provided' as per Section 67 of the Finance Act, 1994. The term 'gross amount charged' should not be construed as any amount billed by the service provider but rather the amount directly related to the service provided. Since the Appellant did not provide any services directly to the allottees, the amount collected on behalf of Industrial Associations is not liable for service tax. The Circular dated 17.07.2010 specifies that Rs. 3 per sq. Mtr. is retained by the Appellant while Rs. 2 per sq. Mtr. is paid to the Industrial Associations. The Appellant s records show the amount transferred to the Industrial Associations as a liability, proving that the disputed amount was not retained. The amount of Rs. 2 collected from lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vies deposited into the Government treasury, are not taxable services. The Hon'ble CESTAT Delhi, in Central GST Delhi v. Delhi International Airport Ltd. - 2023 (5) TMI 867, held that fees collected for sovereign/public functions, even if termed differently, are not subject to service tax. The fees collected by the Appellant, such as Infrastructure Upgradation Fund, Transfer Fee, and other Miscellaneous Fees, are mandated by statutory provisions and pertain to land development and maintenance. These charges are not for commercial purposes but statutory functions. The Hon'ble CESTAT Ahmedabad, in Gujarat Industrial Development Corporation v. CCE ST, Ahmedabad-III - 2018 (11) TMI 363 - CESTAT AHMEDABAD ruled that maintenance charges collected by a State Industrial Development Corporation are not taxable. The Supreme Court remanded the case for reconsideration in light of Krishi Upaj Mandi Samiti v. CCE ST-2022 (2) TMI 1113- SUPREME COURT which upheld that statutory fees collected by sovereign authorities are not subject to service tax. Following the Supreme Court's direction, the Hon'ble CESTAT Ahmedabad ruled vide Final order 01.05.2024 cited as 2024 (1) TMI 520 - CE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have carefully gone through the rival arguments. It is not in dispute and is explicitly accepted by the Ld. Commissioner in the impugned order that GIDC has been discharging various statutory functions under Article 243 W of the Constitution and charges such as Infrastructure upgradation fund and transfer fees were collected in discharge of the statutory functions and were exempt under Item No. 39 of Notification No. 25/2012-ST. However, income earned by M/s. GIDC from 01-10-2011 to 30- 06-2012, before the notification came into effect, is not eligible for exemption and is liable for Service Tax. We find that as per circular dated 18th December 2006 bearing No.89/7/2006 it is stated that - The Board is of the view that the activity performed by the sovereign/public authorities under the provision of the law are in the nature of statuary obligations which are to be fulfilled in accordance with the law . The fee collected by them for performing such activates is in the nature of compulsory levy as per the provisions of the relevant statute, and it is deposited into the Government Treasury. Such activity is purely in the public interest and it is undertaken as mandatory and statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovide amenities as defined in clause (a) of Section 2 of the MID Act to the industrial estates established by it. Thus, it is the statutory obligation of MIDC to provide and maintain amenities in its Industrial estates such as roads, water supply, street lighting, drainage, etc. Thus, we find that the activities for which the demand was made are part of the statutory functions of the MIDC under MID Act. As stated earlier, the demand is in respect of service charges collected from plot holders for providing them various facilities including maintenance, management and repairs. As provided in the circular dated 18th December, 2006, for providing amenities to the plot holders, the service fees or service charges collected by MIDC are obviously in the nature of compulsory levy which is used by MIDC in discharging statutory obligations under Section 14. We find that even in the Order-in-Original, there is no finding of fact recorded that the service rendered for which service tax was sought to be levied was not in the nature of statutory obligation. 13 Therefore, we find no error in the view taken by the Appellate Tribunal. No substantial question of law arises. 14 MIDC is a statutory c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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