9911796707
TMI Blog2024 (9) TMI 1359X X X X Extracts X X X X X X X X Extracts X X X X ..... d Upgradation Funds. GIDC collects rent from lessees and pays service tax on the amount retained for infrastructure up-gradation fund. Initially GIDC proposed to create a fund by charging Rs. 9/- per sq. Mtr. as Industrial maintenance fund to be charged from the leaseholders of less than 100 hectares and Rs. 9 per sq. Mtr. as Industrial Up-gradation fund to be charged from the lease holders of more than 100 hectares but subsequently vide resolution dated 10.10.2010 it was decided for merging the Infrastructure Maintenance Fund (IMF) and the Infrastructure Up- gradation Fund (IUF) into a single fund, with new contributions set at Rs.5 per sq. meter from all the lessees out of which Rs. 2 per sq. meter would be allocated to industrial associations, and Rs. 3 per sq. meter to GIDC. A circular dated 17.07.2010 outlined quarterly payments of 40% of the collected amount to industrial associations. An audit by the Central Excise Commissionerate raised objections about GIDC's failure to pay service tax on share of 40% allocated to industrial associations. It was further observed that the appellant failed to pay service tax on the following charges collected from the leaseholders: (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which pertained to the period 01.07.2012 onwards was collected as a statutory levy and not against provisions of any kind of taxable service; (ii) Service Tax amounting to Rs. 13,08,905/- on water charges for the entire period covered under SCN, was also dropped as the water charges are not earned by the appellant by providing any services and same are considered as sale proceeds of essential commodity and also it is covered under Twelfth Schedule under Article 243W of the Constitution; (iii) Service Tax amounting to Rs. 91 28 492/-, on the amount recovered as Infrastructure Upgradation fund and Transfer Fees for the period from 01-07-2012 to March, 2016, as it is covered under Twelfth Schedule under Article 243W of the Constitution. However, it has been held in the impugned order-in-original that the appellant is liable Service Tax amounting to Rs. 1,03,18,874/- and to pay interest on the demand of short-paid/ not-paid Service Tax amounting to Rs. 34,83,749/-for the Misc receipts for the whole period, Rs. 460369/- on IUF for the period Oct. 11 to June 2012 & Rs. 63,74,756/- on transfer fees for the period Oct. 11 to June 2012 total amounting to Rs. 1,03,18,874/- . It was further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of reimbursable expenses which are not charged towards rendition of any services provided but are merely paid for reimbursing the expenses incurred by the service provider on behalf of the service recipient should not form part of the taxable value. . Further, reliance is placed on the decision of the Hon'ble Supreme Court in the case of CST v. M/s. Bhayana Builders (P) Limited, 2018 (2) TMI 1325-SUPREME COURT, wherein the Hon'ble Apex Court analysed the scope of Section 67 of the Act, 1994 and categorically held that the amount charged should be 'for such service provided'. By using the words 'for such service provided" the Act has provided for a nexus between the amount charged and the service provided. In absence of such nexus, the consideration received by the assessee cannot form part of the total taxable value in terms of Section 67 of the Act. That the Appellant has acted in the capacity of a 'pure agent'. The amount collected by the Appellant was duly passed on to the Industrial Associations and therefore no service tax can be levied on such income. 4. Further, learned Counsel argued that the income received under various heads like transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re statutory levies, and no service tax should be levied. He finally argued that the entire demand is liable to be set aside on this basis. He further argued that the extended period of limitation should not apply as there was no suppression of facts. The Appellant, being a governmental authority, should be presumed to act with no malafide intent. Since there is no valid demand for service tax, no interest or penalties should be levied. 5. Shri Mihir G Rayka, learned Additional Commissioner (AR) arguing on behalf of the department has reiterated the findings of the impugned order and emphasized that the demand has been correctly confirmed against the appellant. He argued that the appellant has failed to account for the misc. receipts and prove that same pertain to exempted services and further though GIDC qualifies as a 'governmental authority' and is thus eligible for exemption from Service Tax under Item No. 39 of Notification No. 25/2012- ST, dated 20-06-2012, concerning functions listed under Article 243W of the Constitution, GIDC collects 'Development Charges' for converting land to non-agricultural use, which is covered under functions like 'Regulation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n falls within the ambit of a taxable service." It has been accepted in the impugned order that the "Infrastructural up-gradation fund" and "transfer fees" were covered under article 243W which is a statutory function of the state government covered under the expressions "Regulation of land use and construction of buildings,' 'Roads and bridges,' and 'Planning for economic and social development" and GIDC is a state undertaking which is performing these functions in the state for development of industry in the state. Once it is accepted that these are the statutory functions of the state, the same cannot be exigible to tax under the period prior to 01.07.2012 also. Further misc. receipts which are stated to be in respect of as sub- letting fees, subdivision charges, amalgamation fees, collateral fees are nothing but necessary for orderly regulation of industrial estate and are for of the infrastructural development activity only. It is an avowed statutory duty of the state to develop industry in the state and any charges collected for such making such development cannot be subjected to tax. Hon'ble Bombay High Court in the matter of Commissioner of Central Excise, N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss the Appeals. We direct the Appellant to pay costs quantified at Rs. 10,000/in each Appeal to the Respondent - MIDC within a period of one month from the date on which this judgment and order is uploaded. Place the Appeals for reporting compliance regarding payment of costs on 12th October, 2017 under the caption of "Directions". 7. We find that the above case law is squarely applicable to the facts of the case as any development authority vested with the obligation and powers to develop an industrial estate need to collect fees/ charges as the State Act constituted for the purpose and so long as these fees/ charges are as per the Act and not discretionary, the same are considered to be statutory levies. Accordingly, we hold that "infrastructure up-gradation fund", "transfer fees" and other misc. charges in respect of in respect of as sub-letting fees, subdivision charges, amalgamation fees, collateral fees are necessary for maintenance, management and repairs of the industrial estate under Gujarat Industrial Development Corporation (GIDC), established under the Gujarat Industrial Development Act, 1962 and are not subject to service tax during the impugned period of either befor ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
