TMI Blog2022 (1) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... :- To the extent the space is provided to the poor for the purpose of street vending and street hawking, the submission made by the appellant is agreed upon, but the same cannot be true in case of the shops and stalls rented out. Extended period of limitation - Section 73 of the Finance Act, 1994 - HELD THAT:- Commissioner has found the justification that being statutory authority cannot be subjected to penalty. Without stating Section 80 of Finance Act, 1994 he for these reasons has refrained from imposing penalties on the appellant - it is clear that extending benefit under Section 80 cannot be cited as reason for not invoking extended period of limitation under Section 73 - the invocation of extended period is justified. Matter needs to be reconsidered by the adjudicating authority in respect of the demands made under the head Pay and Park , Bazar auction/ Bazar Fees and Rasta Nuksan Bharpai/ ROW - In respect demands made under categories, Ground/ market Rent. Marriage Hall, Bhade Patti (BOT), Stall Ground Rent, Hospital and Blood bank rent, while the leviability of the service tax has been upheld as per our observations in para 4.8 and 4.9, but the quantum of the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et, renting of sports ground etc. c. 'Hospital Raktapedhi Jaga Bhadel Hospital Blood Bank Ground Rent collected from blood bank allowed to operate from Municipal Hospital Building. d. 'Mandap/Marriage Hall' rent collected against renting of Marriage Hall owned by the noticee. 2.3 Documents pertaining to earnings of the noticee were called for and scrutinized. Statement of several officials working with the noticee and considered relevant to the investigation was also recorded during the course of investigation under the provisions of Section 14 of Central Excise Act, 1944. 2.4 Based on the above allegations, the demand notice bearing F NO DGCEI/ MZU/ I IS 'El 12 (2) 17/ 2016 dated 17.01.2017 was issued to the noticee asking them to show cause as to why: a. The extended period specified in proviso to sub section (1) of Section 73 of the Finance Act, 1994 should not be invoked to demand the Service Tax due from them; b. The services provided by them should not be classified under Section 65 (90a) read with Section 65 (105) (zzzz) of the Finance Act, 1994 upto 30.06.2012 under 65 B (44) 65 B (51), 66 E (a), 65 B (41) and Section 65 B (22) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the heads (1) Pay and Park Fees (2) Bazar auction/Bazar fees (3) Right to pay fees have been dropped. The demand confirmed in OIO dated 29.05.2020 a) Ground/Market Rent b) Marriage Hall Rent c) Stall/Ground Rent d) Built Own Transfer charges (BOT) e) Hospital / Blood Bank Rent. Ground Rent/Market Rent/Stalls - The Twelfth Schedule of the Constitution of India warrants the Appellant to perform functions such as urban planning including town planning for economic and social development public health protection of environment safeguarding interests of weaker sections of the society including handicapped and mentally retarded urban poverty elimination provision of urban amenities and facilities such as parks, gardens and playgrounds promotion of cultural educational and aesthetic aspects etc. The Hon'ble Supreme Court also has taken cognizance of the fact that street vending is a fundamental right and mandated the Parliament to enact a law to ensure this right in Gainda Ram Ors vs M.C.D. Ors - (2010) 10 SCC 715. Further, the Hon'ble Supreme Court in Maharashtra Ekta Hawkers Union vs MCGM - (2014) I SCC 490 directed that the Model Street Vendor Bill, 2009 be prepar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cleanliness charges, electricity charges, furniture charges. It s the rent collected by the Appellant for social /religious functions /educational functions from the poor and needy on no profit no loss basis. Thus these activities of the Appellant would also be not liable to service tax. Blood Bank - The Appellant has allowed specified part of its Indra Gandhi Hospital Building on rent to Navjeevan Medical Relief and Research Foundation, Pune, named as Rajiv Gandhi Blood Bank, which is registered under Section 12AA of the Income Tax Act for running a Blood Bank in the Appellant's hospital. This activity is directly connected in providing health services to the general public. The Appellant considered this service as covered under the Twelfth Schedule of the Constitution and submits that the same is not liable for service tax. Demand on account Pay and Park Fees, Bazar auction/Bazar fees and Rusta Nuksan Bharpai (ROW) is dropped in OIO dated 29.05.2020 basis the judgement of the Hon'ble Tribunal in the case of Nagar Nigam vs. CCE ST - 2019 (21) GSTL 436 and Notification No.1/2018- ST dated 30.11.2018. In Olo dated 19.01.2018 (for the period 2011-12 to 2015- 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the businesses was support service rendered by the appellant for a commercial consideration. Even if it is presumed for argument sake that the charges collected were only to relay the road, but it cannot be denied that the digging took place for commercial activity by a commercial entity. Hence the primary condition for exemption under notification No 25/2012 ST is not satisfied and service tax is demandable from them. Rental Space to Blood Bank: The appellant has claimed that service tax is not payable on space allotted to run blood bank as it is charitable trust registered under Section 12AA of the Income Tax Act, 1961. However, they have not brought any evidence to record that the activity was carried out by the blood bank on charity basis meaning whether the blood bank was giving blood to needy free of cost etc. Renting of Town Park, Open Spaces, etc: The renting of town park, open spaces, etc to M/s Vardhman Developers Ltd, M/s Shreeji Exhibitors, M/s Deepak Charitable Trust was not free of cost. Since these activities were not free from financial considerations, therefore, these activities are not entitled for exemption as per clause 39 of Mega Exemption Number 25/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of seer and as per direction of Hon'ble Supreme Court which culminated Vendors (Protection of livelihood and regulation of street Vending) Act, 2014. The amount being fee and not 'rent cannot be subject to service tax. Moreover, since the amount was collected as statutory 'fee' during discharge of constitutional obligation by a statutory body i.e. Municipal Corporation, therefore, the same is covered under negative list of services as per provisions of section 66 D of the Finance Act, 1994, read with Sr. no 39 of the mega exemption Number 25/2012 ST dated 20.06.2012. Hon'ble Tribunal, in case of Nagar Nigam Vs CCE, Meerut - \ [as reported at 2019 (21) G.S.T.L. 436 (Tri. - Del.)], in a similar case has held as under: 3. It is submitted on behalf of the appellant that the appellant being a Municipal Corporation is discharging the statutory duty of providing spaces. No rent has been collected for the same, rather it is a fee. It is alleged that Department has wrongly considered it as a service. The demand is alleged to be wrong order is prayed to be set aside. Appeal is prayed to be allowed. 4. While rebutting these argument Ld. DR has impressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Tribunal in the case of Nagar Nigam, supra, the Board vide entry at S No 3, of circular number 192/02/ 2016 - S.T., dated 13.04.2016 issued under F. No. 334/ 8/ 2016 - TRU has clarified that no e tax is payable on taxes, cesses or duties. Applying the ratio of judgment in case of Nagar clam of the opinion that the demand of service tax in respect of Bazar fee/ bazaar Nigam, supra, I am of the opinion that auction is not maintainable. 9. The Central Board of Indirect Taxes has issued notification number 01/ 2018 ST dated 0.11.2018 under section 11 C of the Central Excise Act, 1944 thereby exempting levy of service tax on right of way charges for period 01.07.2012 to 30.06.2017. In view of this notification; which has been issued after issue of the previous order in original; the demand in respect of amount collected as 'right of way charges' is not maintainable. 4.3 In respect of the same issue as referred above two divergent approaches cannot be sustained. It is also evident that revenue has not challenged the order dated 25.02.2020 of Commissioner giving relief to the appellants in respect of the demands made on this account. Hence in our view for the past ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice and special assistance department of the Govt. of Maharashtra. 6 BOT Lease Rent- MBMC has already deposited ₹ 10458391/- towards service tax on the amount collected as and by way of lease rent. 7 Blood bank- MBMC will collect the service tax on the amount of rent received and pay the same 8 Mandap- The actual amount liable to service tax needs to be identified and determined as the amount collected towards exempted NOC fees for temporary installation Ganesh Mandap and other religious functions has been clubbed. 4.5 The crux of the submissions made by the appellant in respect of these services rendered by them is that they being Municipal Corporation have rendered these as mandated in terms of Article 243 W of the Constitution of India, read with Schedule 12 and hence fall in the category of exempted services. Dealing with the said argument Commissioner has in his order dated 23.01.2018, recorded as follows: 5.6. The noticee has fallen back on the provisions of Mega Exemption for most of the services with the argument that they are a body constituted under Article 243 W of the Constitution and hence they were only discharging their statutory o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the provisions of Section 66 D (a) of the Finance Act, 1994 and hence I am reproducing these provisions: 66 D. The negative list shall comprise of the following services, namely (a) services by Government of local authority excluding the following services to the extent they are not covered elsewhere (i) service by Department of Posts ... (ii) services in relation to an aircraft or a vessel..... (iii) transport of goods or passenger... (iv) support services, other than services covered under clauses i to (ii) above, provided to business entities; 511. Another issue is that of providing rental space to Blood Bank in the Municipal Premises. The noticee has claimed service tax is not payable on space allotted to run Blood Bank as it is charitable trust registered under Sec12 AA of the Income tax act 1961. As per clause 4 of Notification Number 25/ 2012 ST dated 20.06.2012 Services by an entity registered under section 12AA of the income tax Act, 1961 (43 of 1961) by way of charitable activities is exempted. The noticee has put forth the argument that the Blood Bank was registered under Section 12 AA of the Income Tax Act, but they have not brought any evidence to record tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.6 find that CESTAT Mumbai, has in case of Mormugao Municipal Council [2017 (7) G.S.T.L. 228 (Tri. Mumbai)} held as follows; 9 . In the Cross objection respondent have sought to challenge the levy of service tax on shops rented out by MMC under the pretext that the said shops are part of the market developed by MMC as their constitutional responsibility. Ld. Counsel has sought to rely on the Article 243W and 12th Schedule of 243W, more particularly Entries 12 and 17 thereof. The said article and the 12th Schedule reads as under :- Article 243W reads as under :- 243W - Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow - (a) the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self- government and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to - (i) the preparation of plans for economic development and social justice; (ii) the performance of functions and the implementation of schemes as may be entrusted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Cuddalore Municipality {2021 (4) TMI -500 (Madras High Court)] Hon ble High Court has held as follows: 14. It is submitted that the petitioners are not liable to tax as the petitioner are not a person within the meaning of Section 65B(37) of the Finance Act, 1994 as it stood amended with effect from 01.07.2012. It is further submitted that even if the petitioner is to be considered as a local authority with the meaning of Section 65B(31) of the Finance Act, 1994 as it stood amended with effect from 01.07.2012, the petitioner was exempted from payment of service tax in terms of Sl.Nos.38 39 to the Mega Exemption Notification No.25/2012 ST dated 20.06.2012 which reads as under:~ [TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)] Government of India Ministry of Finance (Department of Revenue) Notification No. 25/2012-Service Tax New Delhi, the 20th June, 2012 G.S.R (E). In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act) and in supersession of notification number 12/2012~ Service Tax, dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarded as service. 28. The tenants all over the country therefore stopped reimbursing the tax element to the land owner. Since landlords were receiving regular demand notices from the department but such notices were being subjected to stalemate, the Finance Act, 2010 amended the provision with retrospective effect and attempted to cure the defect pointed out by the Delhi High Court. 29. Thus, definition of taxable service of renting of immovable property and renting of immovable property was amended to read as follows:- 30. The Delhi High Court in the 2nd Home Solutions Retails (India) Ltd. v. Union of India 2011 (24) S.T.R. 129 (Del) upheld the constitutional validity of the amended definition in Section 65(105)(zzzz) in 2010 with retrospective effect with the following observation :- In view of our aforesaid analysis, we are disposed to think that the imposition of service tax under Section 65(105)(zzzz) read with Section 66 is not a tax on land and building which is under Entry 49 of List II. What is being taxed is an activity, and the activity denotes the letting or leasing with a purpose, and the purpose is fundamentally for commercial o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to levy of service tax to a different class of service providers. It is perhaps for this purpose, the expression any other service in relation to such renting has been used in the Section to indicate service tax has to be charged only where there is a value addition. 36. May be renting of immoveable property service partly overlapped with the taxable service of a real estate agent . This was because there was no definition for the expression service till July, 2012 and therefore there was scope for such overlap in the definition. The definitions are reproduced below:~ Section 65(88) Section 65(89) Real Estate Agent means a person who is engaged in rendering any service in relation to sale, purchase, leasing or renting, of real estate and includes a real estate consultant; Real estate consultant means a person who renders in any manner, either directly or indirectly, advice, consultancy or technical assistance, in relation to evaluation, conception, design, development, construction, implementation, supervision, maintenance, marketing, acquisition or management, of real estate Definition of taxable service in Section 65(105)(v) any service provided or to be provided to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1944 read with 66E of the Act. The definition excluded few categories of activities as service. They are as follows:- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. 46. Barring the above exception, certain services were exempted under Mega Exemption Notification No.25/2012 ST dated 20.06.2012 issued under Section 93(1) of the Finance Act, 1944. Certain activities were listed in the negative list. Those services are not liable to tax as Service tax is payable on the value of all services provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed under Section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Auditor General s (Duties, Powers and Conditions of Service) Act, 1971 and therefore such services are performed by CAG under the statue and cannot be performed by the business entity themselves and thus do not constitute support services. 54. If the activity carried out by the Petitioner Municipalities are categorised as Support Service , it cannot be held that there was a provision of taxable service and such service was liable to tax under Section 66B of the Finance Act, 1994 as in force with effect from 01.07.2012. 55. However, for such support services, service tax was payable by the recipient of such service in terms of Rule 2(1)(d)(E) of the Service Tax Rules, 1994 as amended by notification No.36/2012~ST dated 20.6.2012 with effect from 1.17.2012. 56. For support service provided, the recipient was liable to pay tax on reverse charge basis under Rule 2(1)(d)(E) of the Service Tax Rules, 1994 as amended by notification No.36/2012-ST dated 20.06.2012 as in force from 01.07.2012. 57. Therefore, the Petitioner Municipalities can be held liable to pay service tax only for service specified in Sub-Clauses in (i), (ii) and (iii) of Clause (a) of Section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Article 243 W of the Constitution of India and hence they did not pay the service tax. Hence mens-rea in the case is not established to warrant invoking of extended period of 5 years. If this argument of the noticee is taken into consideration, then there was no need for them to take Service Tax registration and pay service tax 'even for Mandap Service which was being provided by them. In the instant case, the noticee on one hand is putting forth the argument that they are a constitutional body formed under Article 243 W of the Constitution of India and hence not required to pay service tax and on other hand they on their own volition had obtained Service Tax registration and were paying service tax on Mandap Service. This paradoxical situation has remained unexplained and hence there is no doubt of whatsoever nature that mens-rea in the instant case is established. Moreover, if no investigation would have been carried out and the balance sheet of the noticee would not have been examined then there was hardly any manner by which the department could have come to know about the activities carried out by the noticee and the charges being levied for the same. Hence, I am of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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