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TMI Blog2025 (1) TMI 483X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Act, 1937. The retail vending of IMFL is done through its outlets located throughout the State of Tamil Nadu. 2.1 Directorate General of Central Excise Intelligence (DGCEI), Chennai conducted investigation against TASMAC on the issue of non-payment of service tax on the amount received by them as license fee from bar operators. Investigation conducted by DGCEI revealed that TASMAC floated tender for giving license to run the bars and the successful bidders were issued with license by the District Manager of TASMAC. The contractors who are given such license by TASMAC can sell eatables in the bars located within or adjoining the TASMAC shops and can collect empty liquor bottles left by the consumers of liquor in the bar. In lieu of such license given to them, the contractors have to pay license fee. The contractors can do business as per the business timing of TASMAC shops. The license given by TASMAC is renewed subject to the performance of the contractor during the previous year and if any deficiency is noticed in service of the contractor or any misuse noticed, license can be cancelled. Other than eatables, no sale or stock of liquor by contractor is allowed. 2.2 From the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant has filed these appeals. 3. Shri G. Neelamegam, Assistant General Manager, TASMAC appeared for the appellant and Smt. Anandalakshmi Ganeshram, Authorized Representative appeared for the respondent. 3.1 The learned representative for the appellant reiterated the points given in the appeal memorandum. He stated that the appellant-Corporation was constituted by the State Government under a statute to carry out its sovereign rights and that they merely act as an agent of the State Government. They conduct auctions on behalf of the State Government as per Rules, for contractors who want to sell eatables and collect empty bottles at the eatery adjacent to the liquor shop. They receive payments from contractors and pass on the same to the State Government. They receive an agency commission of 1% for this activity. The balance amount represents licence fee and is paid to the state exchequer. The statutory levy was made in exercise of powers conferred under Tamil Nadu Prohibition Act, 1937 vide GO Ms. No. 20, Home, Prohibition and Excise (VI), dated 29/03/2013. He stated that the Hon'ble High Court of Tamil Nadu in its judgment in 'Hotel Bar Association of Tamil Nadu Vs Secr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. Explanation 1. - for the removal of doubts, it is hereby declared that nothing contained in this clause shall apply to,- (A) The functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities who receive any consideration in performing the functions of that office as such member; or (B) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity;' or (C) the duties performed by any person as a Chairperson or a Member of a Director in a body established by the Central Government of State Governments or local authority and who is not deemed as an employee before the commencement of this section. Explanation 2 - for the purposes of this clause, transaction in money shall not include any activity relating to the use of money or its conversion by cash or by any other mode, from one form, currency or de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that the adjudicating authority has taken note of the decision of the Tribunal which has referred to the above Board's Circular in the case of Karnataka State Warehousing Corporation Vs CST Bangalore - 2010 (19) STR 32 (Tri-Bang.). In appeal filed by the department, the Hon'ble High Court of Karnataka in its judgement reported in 2011 (23) STR 126 (Kar.) with regard to taxability of the services provided by the Karnataka State Warehousing Corporation, while confirming that there would be no demand of tax beyond the normal period of limitation however did not interfere with the Tribunal decision upholding tax liability for the normal period of limitation. 6.14 Even when the Government authority performed a service which is not in the nature of statutory activity, the same has been held to be leviable to service tax as held by the Hon'ble Karnataka High Court in the case of Karnataka Government Insurance Department Vs Asst.CCE Bangalore - 2012 (26) STR 521 (Kar.), which ratio was echoed by the Hon'ble Kerala High Court as reported in 2012 (28) STR 337 (Kar.) and also by the High Court of Allahabad in the case of Greater Noida Industrial Developmental Authority Vs CCE & CE r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of tender, from time to time, with the prior approval of the Commissioner of Prohibition and Excise. The Corporation, as agency shall collect the tender amount from the successful tenders and remit the same to the Government on or before teh 25th of the following month and the Corporation may retain 1% of the amount so collected as agency commission". This amendment, in our view, has accorded statutory backing and authority to TASMAC under law to grant the privilege of running bars, selling eatables and collecting empty bottles to private entities by tender. The entire tender amount from such successful tenderers, except for 1% of the collected amount retained as agency commission by TASMAC is remitted to the Government of Tamil Nadu. 6.17 In the circumstances, from 29.03.2013, the impugned services of TASMAC would definitely fall in the negative list of services as statutory function being carried out by them based on authority of law. 6.18 Hence we hold that appellants will be exigible to service tax liability in respect of the impugned activities only for the period 1.7.2012 to 28.03.2013 as 'taxable service' under Section 65B (44) of the Finance Act, 1994. The Ld. Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y may be the subject-matter of a breach of statutory duty or it may be the subject-matter of a complaint. In ordinary parlance, the proceedings may cover penalties for avoidance of civil liabilities which do not constitute offences against the State. This distinction is responsible for any enactment intended to protect public revenue. Thus, all penalties do not flow from an offence as is commonly understood but all offences lead to a penalty. Whereas the former is a penalty which flows from a disregard of statutory provisions, the latter is entailed where there is mens rea and is made the subject-matter of adjudication. In our view, penalty under section 10(3) of the Act [Uttar Pradesh Motor Vehicles Taxation Act, 1997] is compensatory. It is levied for breach of a statutory duty for non-payment of tax under the Act. Section 10(3) is enacted to protect public revenue. It is enacted as a deterrent for tax evasion. If the statutory dues of the State are paid, there is no question of imposition of heavy penalty. Everything which is incidental to the main purpose of a power is contained within the power itself. The power to impose penalty is for the purpose of vindicating the main powe ..... 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