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2024 (6) TMI 132 - AT - Service TaxIssues Involved: 1. Liability of Municipality to pay service tax on various services including 'Renting of Immovable Property Services'. 2. Whether the services provided by the Municipality are sovereign functions exempt from service tax. 3. Applicability of reverse charge mechanism. 4. Validity of demand raised invoking the extended period of limitation. Summary: 1. Liability of Municipality to Pay Service Tax: The primary issue was whether the demands of service tax under various services, including 'Renting of Immovable Property Services', are sustainable. The Tribunal referred to its previous decision in the appellant's own case and the judgments of the Hon'ble High Court in Cuddalore Municipality Vs. Joint Commissioner of GST and Central Excise and St. Thomas Mount Cum Pallavaram Cantonment Board Vs. Additional Commissioner of GST and Central Excise. It was held that the Government or local authority is exempted from payment of service tax on Renting of Immovable Property Services or other services. 2. Sovereign Functions Exempt from Service Tax: The appellant argued that the services provided by the Municipality, such as fees and charges collected for bus stands, public toilets, slaughterhouses, etc., are sovereign functions and thus exempt from service tax. The Tribunal noted that the Hon'ble High Court in Cuddalore Municipality had analyzed whether the services provided by a Municipality are sovereign functions and held that such services are outside the purview of service tax. The Tribunal remanded the matter to the adjudicating authority to reconsider this issue afresh. 3. Applicability of Reverse Charge Mechanism: The appellant contended that some part of the demand was raised on a reverse charge basis, and the appellant is not liable to pay service tax under the Reverse Charge Mechanism as the service recipient is liable. This issue was left open for reconsideration by the adjudicating authority. 4. Validity of Demand Raised Invoking Extended Period of Limitation: The appellant argued that being a 'local authority', it cannot be accused of suppressing facts with the intent to evade payment of service tax. The Tribunal directed the adjudicating authority to consider the issue of limitation, noting that there was no positive act of suppression alleged in the Show Cause Notice against the Municipality. Conclusion: The Tribunal set aside the impugned orders and remanded the matters to the adjudicating authority to reconsider the issues afresh, including the issue of limitation, after giving the appellant an opportunity to furnish evidence and for personal hearing. All issues were left open for reconsideration. The appeals were allowed by way of remand.
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