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2018 (1) TMI 1464 - Commission - Service TaxNon-payment of service tax - Renting of Immovable Property Services - applicant had taken registration with Service Tax department but did not discharge service tax on taxable income received - period from April, 2010 to March, 2015 - demand of service tax under proviso to Sections 73(1) of the Finance Act, 1994 and interest thereon under Section 75 of the Finance Act, 1994 and penalty u/s 76, 77 and 78 of the Finance Act, 1994 apart from demanding late fee for belated filing of returns under Section 70 of the Finance Act, 1994 - An amount of ₹ 51,69,268/- paid by the applicant during the course of investigation was sought to be appropriated towards the service tax demand. Collection of market fee/slaughter house charges - Held that:- The right to collect market fee/slaughter house fee were granted to individuals (lessees) for a financial year based on bids offered during auction conducted by the Municipal Council, Mahaboobnagar for a specified amount. The lessee shall deposit part of the specified amount as three months advance towards the market fee/slaughter house fee. The lessee shall remit the balance specified amount in nine monthly equal instalments starting April of the financial year. The three months advance amount paid by the lessee will be adjusted in the last three months of the financial year (January-March). The lessees shall collect the market fee/slaughter house fee as per Scheduled Rates already fixed and notified by the Municipality - collection of market fee/slaughter house charges were not towards renting of immovable property - Bench holds that no service tax is payable on slaughter house fee collected by the applicant during the impugned period. It is also seen that with respect to ‘market fee’, Board vide Circular No. 157/8/2012-S.T., dated 27-4-2012 had clarified that the services provided by Agricultural Produce Marketing Committee are classifiable under ‘Business Auxiliary services’. Para 5 of the said circular reads as “As statutory bodies, APMCs provide basic facilities in the market area out of the ‘market fee ’ collected from the licencees, mainly to facilitate the farmers, purchasers and others. APMCs provide a host of services to the licencees in relation to procurement of agricultural produce, which are ‘inputs’ in terms of the definition given in Section 65(19) of the Finance Act, 1994 itself. To that extent the meaning of ‘input’ is much wider in scope than the meaning assigned in Rule 2(k) of Cenvat Credit Rules, 2004. Therefore, it is clarified that the services provided by the APMC are classifiable as BAS and hence covered by the exemption under Notification 14/2004-S.T.” Demand of service tax under the category of ‘Renting of Immovable Property Service’ - Held that:- It is observed that prior to 1-7-2012, the services provided by the applicant would not be covered under Renting of immovable property service but more appropriately covered under Business Auxiliary Service and exempted in terms of Notification No. 14/2004 S.T., dated 10-9-2004. With effect from 1-7-2012, with the introduction of Negative List, the services provided by a ‘local authority’ such as Panchayat, Municipality, Municipal Committee, etc., as well as services relating to agriculture and agricultural produce are covered under the Negative List. Further activity in relation to any function entrusted to a municipality under Article 243W of the Constitution are specifically exempt under mega exemption notification No. 25/2012-S.T., dated 20-6-2012. In any case, the charges collected by the applicant cannot be considered as consideration for services relating to renting of immovable property. Hence the Bench holds that the demand of Service Tax on market fee under ‘Renting of Immovable property service in not sustainable. Penalty - Held that:- Bench is in agreement with the department’s view that but for the investigation done by the Anti-Evasion Wing of the Jurisdictional Commissionerate, the non-payment of service tax by the applicant would not have come to light and there would have been loss of revenue to the Government exchequer. However considering the fact that the applicant is a Municipality, a local authority, there could be no reasonable belief to charge mala fides - the Bench considers it a fit case to accord full immunity from penalty to the applicant. Prosecution - Held that:- The Bench considers it as a fit case for grant of immunity from prosecution to the applicant. Application disposed off.
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