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TMI Blog2019 (6) TMI 1328X X X X Extracts X X X X X X X X Extracts X X X X ..... d payments by bar contractors were made in accordance with the provisions of Statute, representing devolution of sovereign rights of the State through the appellant and hence, is not exigible to service tax ? ii. Whether, on the facts and in the circumstances of the case, the Tribunal erred in upholding service tax payment for period from 01.7.2012 to 31.3.2013 without appreciating that character of impugned payments are not modified by the introduction of Negative List and these payments were as per Statute and in effect made only to the State of Tamil Nadu and is not exigible to service tax ? And iii. Whether on the facts and in the circumstances of the case, the Tribunal erred in not adjudicating the alternate prayer of the appellant, without prejudice to other claims, that from 01.7.2012, only 1% of the payments made by the contractors can be subject to service tax, as has been done from 01.4.2013 onwards ?" 3. Before we proceed to consider the submissions made on either side, we would like to point out that the issue involved in the instant case is as to whether the activity done by the assessee would be exigible to service tax. However, the period of such exigibility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s contention with regard to their liability from July 2012 to March 2013, then this Court may consider the effect of insertion of Rule 9A of the Retail Vending Rules and that the relief granted by the Tribunal for the period from April 2013 to till date may be extended by directing payment of service tax on 1% of the revenue generated by the appellant. 8. The learned counsel for the appellant has elaborated his submissions and taken us through the nature of activity done by the appellant. The relevant provisions of the Tamil Nadu Prohibition Act, 1937 and the Rules framed thereunder and in particular, the Retail Vending Rules, 2003, as it stood amended with effect from 29.3.2013. In support of his submission that the nature of activity, being devolution of a statutory right in favour of the licencees, always remains a statutory right and that no service tax is leviable, he has placed reliance on the decision of the Bombay High Court in the case of CCE, Nashik Vs. Maharashtra Industrial Development Corporation [reported in 2017-TIOL-HC-MUM-ST]. 9. Per contra, Mrs.Hema Muralikrishnan, learned Senior Panel Counsel appearing for the respondent has sought to sustain that portion o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt as agency commission. 12. The proposal made by the Commissioner of Prohibition and Excise was accepted by the Government and after Rule 9, Rule 9A was added to the Retail Vending Rules, which reads thus : "Rule 9A : Grant of Privilege to Run the Bar: The privilege of running bars may be granted to private parties by tender. The Board of the Corporation may decide the upset price and other terms and conditions 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 tenderers and remit the same to the Government on or before the 25th of the following month and the Corporation may retain 1% of the amount so collected as agency commission." 13. The learned counsel for the appellant would interpret the said Rule by contending that the privilege of running bars is vested with the appellant as a statutory right and when this privilege is granted to a private party, it amounts to devolution of a statutory right and it continues to remain as a statutory right. 14. Rule 9A of the Retail Vending Rules deals with grant of privilege to run the bar. It stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Tamil Nadu Prohibition Act, 1937 read with the Retail Vending Rules is on account of a policy decision taken by the Government whereby the State of Tamil Nadu enacted the Tamil Nadu Prohibition Act, 1937 and framed various Rules. Therefore, there is no vested right granted to any private individual to trade in alcohol in the State of Tamil Nadu and already, the privilege has been vested with the appellant, which is a State Owned Corporation. Therefore, if the appellant is to part away with such a statutory right, there should be a statutory authorization permitting the appellant to part away with that statutory right. Rule 9A of the Retail Vending Rules, though states that it is a grant of privilege to run the bars, private parties are not allowed to vend liquor in the premises, but are only entitled to sell eatables and collect empty bottles and cartons. Therefore, to state that the right to sell eatables and collect empty bottles is a statutory right is an absurd proposition, which cannot be accepted. 18. We agree with the reasons assigned by the Tribunal, more particularly in paragraph 6.11 of the impugned order wherein the Tribunal took note of the fact that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the finding rendered by the Tribunal. Accordingly, substantial question of law 1 and 2 are answered against the assessee. 21. With regard to the third substantial question of law, which is an alternate argument, the learned counsel for the appellant would submit that the Tribunal accepted the contention that Rule 9A of the Retail Vending Rules, having been inserted in the Rules with effect from the year 2013, gives a statutory backing and authority to the appellant to grant the privilege of running bars, selling eatables and collecting empty bottles to private entities by tender and that they are entitled to retain 1% of the collected amount as agency commission and the remaining should be remitted to the Government of Tamil Nadu. The Tribunal, therefore, held that the appellant is liable for service tax on 1% of the revenue retained by them as agency commission. 22. We are informed that the Revenue proposes to file an appeal as against such a finding. However, till date, there is no appeal on record. Nevertheless, as observed earlier, we do not propose to foreclose the rights of the Revenue in the event they challenge the findings of the Tribunal on this issue regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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