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Chhattisgarh State Industrial Development Corporation Ltd. Versus C.C.E. &S. T., Raipur

2016 (6) TMI 367 - CESTAT NEW DELHI

Repair and Maintenance Service - liability of the agent or principal - leasing of Govt. land and consideration received towards Maintenance Charges and Street Light Charges - Demand of Service tax alongwith interest - Held that:- there is no doubt that the service was provided by the appellant in relation to maintenance or repair of immovable property in terms of the written agreement ('lease deed') and therefore is covered under Section 65(64) ibid both prior to 01.05.2006 and with effect there .....

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y to pay service tax is either on the assessee himself or the agent of assessee. In the present case, the appellant is a company incorporated under Companies Act, 1956 and acted as agent on behalf of the Chhattisgarh Govt. which authorised it to lease out land to prospective entrepreneurs for setting up industry, etc. and to provide various services on behalf of State Govt. and it accordingly is covered under the definition of assessee. - Invokation of extended period of limitation - Imposi .....

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hat penalty under Sections 76 and 78 ibid are imposable but penalty under Section 76 is not imposed as penalty under section 78 is imposed. As a corollary it follows that if penalty under section 78 ibid is not found imposable, penalty under section 76 would spring bad to life. However, we also note that the adjudicating authority waived the penalty prescribed under Section 76 ibid under Section 80 of Finance Act, 1994 by invoking extended period of limitation. - Decided partly in favour of appe .....

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s including mandatory equal penalty under Section 78 of the Finance Act, 1994. 2. The facts of the case, briefly stated, are as under:- The appellant, Chhattisgarh State Industrial Development Corporation Ltd. (CSIDCL) was allegedly engaged in rendering taxable service, namely, Repair and Maintenance Service, but had not taken the registration under Finance Act, 1994. While auditing of books of accounts of M/s. G.R. Sponge and Power Ltd., Raipur, one of the recipients of service provided by the .....

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x. (ii) In the absence of any agreement, the maintenance and street light charges collected by it on behalf of Chhattisgarh Govt. cannot be subjected to service tax. (iii) It was only a facilitator on behalf of the State Govt. (iv) The charges collected were accounted separately under the head State Govt. Account. (v) There is no wilful mis-statement or suppression of facts and therefore extended period and mandatory penalty are not invocable. 4. Ld. Departmental Representative, on the other han .....

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s a limited company registered under the Companies Act, 1956, which was leasing the Govt. land and also collecting charges for maintenance of street light and repair and maintenance of roads, etc. from the entrepreneur allottees of the land. Even if these charges are statutorily prescribed, they remain a consideration for rendition of service. There is nothing in Section 66 of the Finance Act, 1994 which implies that if charges for rendition of taxable service are statutorily prescribed the same .....

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rnment Agency, nor is there any exemption from the levy of service tax merely because service recipient is Govt. or Govt. agency. If such services are exempted under an exemption Notification issued under Section 93 ibid, that is a separate issue. The appellant cited CESTAT judgement in the case of Maharashtra Industrial Development Corporation (MIDC) Vs. CCE, Nasik [2014-TIOL-2022-CESTAT-MUM] and [2015-TIOL-CESTAT-Mumbai] in its support, wherein CESTAT in effect held that based on MID Act, 1961 .....

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ustoms, New Delhi Subject : Applicability of Service tax on fee collected by Public Authorities while performing statutory functions /duties under the provisions of a law - Regarding A number of sovereign/public authorities (i.e. an agency constituted/set up by government) perform certain functions/ duties, which are statutory in nature. These functions are performed in terms of specific responsibility assigned to them under the law in force. For examples, the Regional Reference Standards Labora .....

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has arisen whether such activities provided by a sovereign/public authority required to be provided under a statute can be considered as provision of service for the purpose of levy of service tax. 2. The issue has been examined. The Board is of the view that the activities performed by the sovereign/public authorities under the provision of law are in the nature of statutory obligations which are to be fulfilled in accordance with law. The fee collected by them for performing such activities .....

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no service tax is leviable on such activities. 3. However, if such authority performs a service, which is not in the nature of statutory activity and the same is undertaken for a consideration not in the nature of statutory fee/levy, then in such cases, service tax would be leviable, if the activity undertaken falls within the ambit of a taxable service. 4. Trade and field formations may be advised accordingly. 5. Hindi version will follow. It is clear that even as per the above CBEC circular d .....

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e Govt. treasury. Therefore, event the said CBEC circular (non-binding as it is on CESTAT) does not come to the appellant s rescue. Here it is pertinent to mention that vide Exemption Notification No.23/2016, dated 13.04.2016, the Govt. has inter alia exempted services rendered by Govt. or local authorities to other Govt. or local authorities and services rendered by Govt. or local authority by way of issuance of passport, driving licence, birth/death certificate, etc. This clearly shows that un .....

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ny legal basis. Indeed, CBEC Circular No.192/62/2016-ST, dated 13.04.2016 (at Srl.No.5 of the table contained therein) clearly states that It is clarified that any activity undertaken by Government or a local authority against a consideration constitutes a service and the amount charged for performing such activities is liable to Service Tax. It is immaterial whether such activities are undertaken as a statutory or mandatory requirement under the law and irrespective of whether the amount charg .....

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it is observed that the documents which spell out the activities; mention about maintenance of industrial area and annual street light charges. The taxable Commercial or Industrial Construction Service (CICS) [Section 65(25b)] ibid inter alia covers the repair, alteration, renovation or restoration of building/civil structures or similar services in relation to building or civil structure, which is not the case here. On the other hand, (Management), Maintenance or Repair Service (MMR) was defin .....

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rvice provided by- (i) Any person under a contract or an agreement; or (ii) A manufacturer or any person authorised by him, in relation to,- (a) management of properties, whether immovable or not; (b) maintenance or repair of properties, whether immovable or not; or (c) maintenance or repair including reconditioning or restoration, or servicing of any goods, excluding a motor vehicle; There is no doubt that the service was provided by the appellant in relation to maintenance or repair of immovab .....

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nd therefore constitute consideration for taxable service. Once the taxable service is being provided against a consideration, service tax becomes payable. The clause 7 of Section 65 ibid defines the assess as follows:- (7) assessee means a person liable to pay the service tax and includes his agent; Thus the liability to pay service tax is either on the assessee himself or the agent of assessee. In the present case, the appellant is a company incorporated under Companies Act, 1956 and acted as .....

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] and was answered in the affirmative; para 61 of the said judgement is reproduced below:- 61. This Court has noticed hereinabove that the Company in liquidation is a dealer with regard to the Page 37 37 sale of its assets by way of an auction under a winding up order. Further, we have noticed the settled law that an Official Liquidator steps into the shoes of the Director of the company in liquidation and performs his statutory functions in accordance with the directives of the Court. Further .....

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the liability to pay sales tax, in the present case, would be on the Official Liquidator in the same manner as the dealer, that is, the Company in liquidation. 10. As regards the allegation of wilful mis-statement of facts, we find that the only para 7 of the Show Cause Notice contains the basics of the said allegation and is quoted below:- 7. Further, Noticee has never disclosed the facts in writing to the department. Facts came to the notice of the department at the time of Audit. Hence, it c .....

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not agree that mere non-disclosure of the facts to the department can sustain the said allegation. In the case of Uniworth Textiles Ltd. Vs. CCE, Raipur [2013 (288) ELT 161 (SC)], it was held that mere non-payment of duties is not equivalent to collusion or wilful mis-statement or suppression of facts, otherwise there would be no situation for which ordinary limitation period would apply. Inadvertent non-payment is to be met within the normal limitation period and the burden is on Revenue to pro .....

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garh-I [2007 (216) ELT 177 (SC)], Supreme Court went to the extent of ruling the mere omission to give correct information is not suppression of facts unless it was deliberate and than an incorrect statement cannot be equated with wilful mis-statement. Thus, we hold that the extended period of limitation is not invocable in the present case, which renders (part of) the demand pertaining to the extended period beyond the normal period time-barred and penalty under Section 78 ibid non-imposable. .....

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