TMI Blog2022 (5) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... xisted. The megatrends in infrastructure development of the country in recent decades have increasingly incorporated private sector participation, to a lesser or larger degree, in big projects requiring massive investment for transfer of risk to the private entity whose core competency it is and, in return for assured lumpsum payment, also the potential earnings through models such as build operate transfer (BOT) and build own operate transfer (BOOT). The terms of engagement is thus clear: possession of the upgraded/constructed asset is transferred to the appellant for the stream of lumpsum payment guaranteed by the appellant while alienating risk of sub-optimal use and risk of asset deterioration - Oversight by agencies of the state is intended to assure proper maintenance of the asset and fixation of rates is retained by the government to prevent exploitative exaction both of which are mandated by public interest and not as a facet of principal-agent equation. Thus, tax liability does not arise by way of being commission agent in section 65(19) of Finance Act, 1994 for the period prior to introduction of negative list regime. Adjudication should have been limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir principal to principal transaction with risk of loss assumed by them, the amount retained is not commission , as alleged by service tax authorities, but profit which is beyond the reach of Finance Act, 1994. It is further contended that the issue stands decided in their favour by decisions of the Tribunal in Intertoll India Consultants (P) Ltd v. Commissioner of Central Excise, Noida [ 2011 (24) STR 611 (Tri-Del) ], in Ideal Road Builders P Ltd v. Commissioner of Service Tax, Mumbai [ 2015 (40) STR 480 (Tri-Mumbai) ] in Patel Infrastructure Pvt Ltd v. Commissioner of Central Excise, Rajkot [ 2014 (33) STR 701 (Tri-Ahmd) ] and in Ashoka Buildcon Ltd v. Commissioner of Service Tax, Nashik [ 2017 (49) STR 404 (Tri-Mumbai) ] as well as the decision of the Hon ble High Court of Andhra Pradesh in Commissioner of Customs Central Excise, Guntur v. Swarna Tollway (P) Ltd [ 2013 (31) STR 419 (AP) ] and the justification offered in the impugned order to distinguish the facts therein from the present dispute does not stand test of judicial scrutiny. It was also argued by Learned Counsel for the appellant that the impugned transaction does not find fitment within any of the activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction also fits within provision of service on behalf of the client which is yet another enumeration in the definition. As commission agent was considered deserving of separate inclusion among the activities enumerated in the definition, the two are mutually exclusive and the hesitancy in narrowing the nature of the activity to one or the other is at odds with certainty that should guide taxation. It appears to us from 8. The activities performed by M/s SDIPL i.e. collection of user fee/toll, from ultimate users and the activities of M/s MSRDCL and M/s GRICL, i.e. providing access to use the road on charging of user fee/toll are intangible in nature and therefore, they qualify to be called as service. From the terms of contract agreements it appears that M/s SDIPL had merely been appointed as Agent of M/s MSRDCL and M/s GRICL [M/s GRICL also used this term for M/s SDIPL in their agreements] to collect the toll or user fee, which is actually to be levied and collected by M/s MSRDC or M/s GRICL, as the case may be, on the behalf of later. It is not the case that if some excess collection is made, on the rates being revised, the same can be retained by M/s SDIPL, but, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as regular or repeated dealings; a purchaser of goods; one who frequents any place of sale for the sake of purchasing or ordering goods. A business customer is one who has the use and habit of resorting to the same person or place to do business; therefore, a stranger who goes into bank to get a cheque collected, is not a customer of the bank. It can be seen from the above definition, a person is considered as customer of a business house when he has repeated dealings with the business house. To our mind, by any stretch of imagination, individual using the DND bridge and pays toll to the authority cannot be considered as a customer. The definition of the BAS either prior to 10-9-2004 or post-10-9-2044 has to be considered from the point of view of whether the appellant has provided any customer care services on behalf of the client. First and foremost, it is to be noted that NTBCL is not a client of the appellant as the appellant is not promoting any customer care service of NTBCL. There is no visible activity done to please the user of the DND bridge to take care of their needs or something which is done which induces to come again and again to the said DND bridge. It may be n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e users) on behalf of AMTRL and thus the activity would also be covered under clause (iii) of the definition of BAS. From the above it is apparent that the appellants are providing a bouquet of services to the customers on behalf of the principal AMTRL and thus the appellants are also covered by the clause (iii) of the definition of BAS. 8. Learned Counsel appears to have relied upon Intertoll India Consultants (P) Ltd to draw attention to non-taxability of receipts under the authority of section 65(105)(zzb) of Finance Act, 1994 in a somewhat similar outsourcing of activity. However, tax authorities had sought to classify the transaction therein under another of the enumerations in the definition of business auxiliary service in section 65(19) of Finance Act, 1994 that required elucidation of customer while examining the applicability of client to describe the equation between the owner of the infrastructure and the appellant therein. The contrary decision in Larsen and Toubro Ltd was also founded on a different approach to the meaning of customer which was then built upon to conclude that the service impugned therein had been rendered to users on behalf of client - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of section 65(105)(zzb) of the Finance Act, 1994. It is specifically covered at sr.no. (vi) read with (vii) of the definition of Business Auxiliary Services . For the ease of reference, the same is reproduced below- xxxxxx The Board, vide its Circular No.152/3/2012-ST dated 22.02.2012 has also clarified the matter. The said circular is reproduced as under for ease of reference:- xxxx Therefore, I hold that the services provided by M/s SDIPL to M/s MSRDCL or M/s GRICL are levaible to service tax section 6 of Chapter V of the Finance Act, 1994 and hence, they are liable to pay the Service tax in accordance with Section 68 of the Act, ibid. in the impugned order which is entirely distinct from, and separate of, (iii) any customer care service provided on behalf of the client in section 65(19) of Finance Act, 1994. 10. The submission that the agencies of the state government are clients of the appellant on whose behalf maintenance of roads is undertaken appears to have overlooked the underlying scheme of the tender which brought the appellant in to the transaction. The contractual arrangement between the appellant and the agencies of the state was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts only the purse of the appellant. A commission agent is a channel partner in delivery of goods/service in which the risk of market rejection continues to be borne by the principal and bears no resemblance similarity to the contractual obligation in the impugned transaction of the appellant which is all about risk assumption. Oversight by agencies of the state is intended to assure proper maintenance of the asset and fixation of rates is retained by the government to prevent exploitative exaction both of which are mandated by public interest and not as a facet of principal-agent equation. Thus, tax liability does not arise by way of being commission agent in section 65(19) of Finance Act, 1994 for the period prior to introduction of negative list regime. 13. Insofar as the period after 1st July 2012 is concerned, the adjudicating authority has determined that the activity conforms to the definition of service in section 65B (44) of Finance Act, 1994 but devoid of the privilege of exclusion afforded by section 66D(h) of Finance Act, 1994 that is available only to agencies of state government and not to the appellant rendering service to the said agency. Reliance was plac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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