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2023 (2) TMI 1094 - AT - Service TaxExemption from payment of Service Tax - supply of tangible goods - providing agricultural machinery on rental basis to the farmers - statutory functions performed under the Madhya Pradesh Tractor Dwara Kheti (Prabharo Ki Vasuli) Adhiniyam, 1972 or not - Applicability of Circular dated December 18, 2006 issued by the Department of Agriculture - HELD THAT:- It cannot be doubted that the functions performed by the appellant are statutory in nature. The Act has been enacted to provide for cultivation to certain lands by means of tractors by the State Government and for the recovery of charges in respect thereof. A cultivator can make an application to the Director for carrying out tractor cultivation in whole or part of his land. If the application is accepted, a bond has to be executed by the cultivator and on execution of the bond, the Director shall cause tractor cultivation to be carried out on the land of the cultivator. The view that has been taken is supported by the judgment of the Supreme Court in Krishi Upaj Mandi Samiti vs. Commissioner of Central Excise [2022 (2) TMI 1113 - SUPREME COURT] where it was held that it does not provide that on deposit of the money received by the Market Committees into the Government Treasury/sub-treasury or a bank duly approved, it ceases to be the Market Committee Fund. It will continue to be the Market Committee Fund. Even it is the case on behalf of the appellants that the fees collected, which will be deposited in the Market Committee Fund will be utilized by the Market Committee for expanding/benefit of the Market Committee etc. In the instant case, it is seen that a mandatory duty has been cast upon the appellant to provide tractor cultivation on the land of the cultivator if the application of the cultivator is accepted and a bond is executed on payment of charges as specified in the Act and the Rules. Such charges are also deposited in the District Treasury by the appellant - The Principal Commissioner, therefore, committed an error in concluding that the services performed by the appellant are not statutory in nature as they have not been performed in terms of specific responsibility assigned to it under the law in force. The Principal Commissioner was, therefore, not justified in confirming the demand of service tax. Such a being decision, even if it is held that the services provided by the appellant fall under the category of "supply of tangible goods", then too by virtue of the Circular dated December 18, 2006, the appellant cannot be called upon to pay any service tax. Appeal allowed.
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