9911796707
TMI Blog2019 (12) TMI 1486X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation, Govt. of Bihar, Beltron Bhawan, Shastri Nagar, Patna-800 023 (BSEDC in short) and also provided 'Support Service to Business and Commerce' to the Central Bank of India (CBI in short) and in lieu received Rs. 36,77,02,905/-, which included Service Tax including Cesses totally amounting to Rs. 4,21,52,940/-. But the appellant, in connivance with its Director namely Shri Anand Sarnaik, did not assess their taxable value correctly, did not file periodical returns and also did not deposit the same in the Government's account and thus, they contravened the provisions of Sections 66, 67, 68, 69 and 70 of the Finance Act, 1994 read with Rule 4, 5, 6 and 7 of the Service Tax Rules, 1994. Accordingly, the said amount of Service Tax including Cesses was proposed to be recovered from the appellant under the extended time limitation on account of suppression of facts with intent to evade Service Tax along with interest under the provisions of Section 73(1) and 75 of the Act, respectively. In addition, the penalty under Section 77 and 78 of the Act was also proposed to be imposed upon the appellant for their act of omission and commission and intentional evasion of Service Tax and C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services'. As per the notice, the management consultant service related to consultancy or technical assistance in relation to financial management, logistics management, procurement and management of information technology or other similar areas of management. The works pertaining to workflow measurement module, capacity building programme, awareness and sensitization programme and facility management services were covered by human resources management. Opening of bank accounts fell within financial management. Key management system and project management module came under management of any organization. The biometric (fingerprint) module, digital photography, hand held terminals and their customization, application software, smart card, data entry and storage module, electronic payment module, design, development, implementation and maintenance of these technical inputs, beneficiary information like photograph, biometric fingers print, data entry of records, issuance of smart card, hand held terminals, integration of electronic payment mechanisms were covered by management of information technology resources. Thus, the over-all characteristics of the services provided by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell as on its Director namely Shri Anand sarnayeke. Hence, the present appeal. 8. Shri Anurag Mishra and Pragya Pandey appeared on behalf of the appellant and during the course of hearing, the learned counsel of the appellant after submitting the text of MNREGA, mainly emphasized that as per the agreement dated 10.09.2008 executed by and between the Hon'ble Governor of Bihar acting through its authorized representative, BSEDC and the consortium consisting of the appellant and M/s. Anil Printers Limited and M/s. Face Technologies (Proprietary) Limited; the appellant was assigned with the work of generation of digital job cards (E-shakti cards) for the beneficiaries of MNREGS. He stressed upon that MGNREGA was notified on September 7, 2005 with the mandate to provide at least 100 days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work. The goals of this legislation were to provide social protection for the most vulnerable people living in rural India by providing employment opportunities; to provide livelihood security for the poor through creation of durable assets; to improve water security, soil con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be transferred by the appellant to the Government of Bihar against the token money of Rs. 1/- only. Apart from the above, the appellant was also assigned with the responsibility to collect comprehensive data/information about the beneficiaries of MNREGS, uploading the same into servers, feeding into electronics chips to be fitted in digital job cards (E-shakti cards) and issue thereof. In addition, the appellant was also required to run awareness programme about MNREGS and its sensitization. The counsel pointed out that the aforesaid fact has also been admitted by the learned adjudicating authority at para-36 and 41 of his Order hence, there is no dispute in this regard. 11. The learned Counsel further stressed upon that the very purpose of generation of digital cards was to ensure correct and timely wage payment to genuine beneficiary of MNREGS initiated under MNREGA, 2005. The cards had to become the identity proof for MNREGA workers of Bihar, providing them access to bank accounts to withdraw or to deposit money anytime he wanted. The project had also intended not only to ensure timely payment of wages but also to make the physical presence of the workers at the bank, unnecess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht under the category of a taxable service and no service tax is leviable on such activities." He further quoted the decision pronounced in the case of CCE v. Ankit Consultancy Ltd. reported in 2007 8 STT 84 (New Delhi - CESTAT) and the decision of the Tribunal in the case of Commissioner of Central Excise, Indore Vs. Virgo Softech Ltd. reported in 2018 (9) GSTL 274 (Tri.-Del.). He also referred to CBEC Circular No.89/7/2006-S.T., dated 18-12-2006 whereby it has been clarified that 'the activity which is undertaken as mandatory and statutory function and is purely in public interest are not in the nature of service to any particular individual for any consideration'. In the light of above case laws and clarifications, the learned Counsel vehemently argued that the activities as carried out by the appellant were part of the sovereign function under MNREGA, 2005 and hence, was not be liable to service tax. 14. The learned Counsel also quoted Board Circular No.125/7/2010-ST, dated 30-07-2010 by which it has been clarified that the 'amount received for implementation of project under a centrally sponsored scheme cannot be presumed as consideration for providing a taxable service' and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NREGS. In view thereof, they were not liable to pay Service Tax under either of the categories. The learned counsel contended that the adjudicating authority has confirmed the demand without determining the specific nature and classification of service hence, is not sustainable in view of the decision of Hon'ble Kerala High Court pronounced in the case of Kerata Colour Lab. Association vs. Union of India 2003 reported in (156) ELT 17 (Ker.) whereby it was held that "taxable event occurs because of the service rendered" and "the taxable event determines the true event of tax". 16. The learned AR supported the version of the Commissioner and stressed upon that the Order-in-Original is just, legal and valid hence, does not deserve any interference at this level. 17. We have heard both sides and perused the appeal records. 18. From various clauses and terms and conditions of the agreement dated 10.09.2008, it transpires that the Government of Bihar, through its agency BSEDC, allotted the entire work of generation of digital job cards (E-shakti cards) for the workers of MNREGS to the appellant on turn-key basis. For the aforesaid purpose, the appellant had to set-up the entire infras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt statute, and it is deposited into the Government Treasury. Such activity is purely in public interest and it is undertaken as mandatory and statutory function. These are not in the nature of service to any particular individual for any consideration. Therefore, such an activity performed by a sovereign/public authority under the provisions of law does not constitute provision of taxable service to a person and, therefore, no service tax is leviable on such activities." 19. We are further of the considered view that the Appellant was acting as an implementing agency and implementing the government welfare scheme sponsored by the Government of Bihar, accordingly the entire demand against the Appellant is contrary to the Board's Circular No.125/7/2010-ST dated 0.07.2010 which clarifies that levy and collection of service tax on State Government agencies/departments implementing the CSS under a central grant is not legally tenable and therefore, in such cases service tax should not be demanded. Since the Appellant has executed the project to facilitate the Government in discharging of its sovereign duty, the Appellant cannot be made liable for service tax. The appellant's case is s ..... 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