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TMI Blog2025 (1) TMI 1258X X X X Extracts X X X X X X X X Extracts X X X X ..... t - assessee [ADDA] is before the Tribunal. The Revenue being aggrieved by the demands so dropped, have preferred their own appeal against the said impugned order. Both these appeals have been taken up together for Hearing. 3. The summary of submissions made by the Ld Counsel appearing on behalf of the appellant assessee is as under : 3.1 No basis to the calculation of the demanded amount of service tax (1) In course of arriving at the demanded amount of service tax proposed in the Show Cause Notice, the Department placed reliance on figures obtained from the bank statements of the assessee for the said period. The bank account references, and the total figures drawn therefrom are tabulated in Annexure A to the Show Cause Notice (vide page 21 of the Paper Book dt. 15.7.2014). (2) A bare perusal of such tabulation will indicate, that no details are provided of the specific transactions reflected in the bank statements that the adjudicating authority deemed to be taxable. No copy of the relied upon bank statements even form part of the specified enclosures to the Show Cause Notice (vide page 17 of the Paper Book dt. 15.7.2014). (3) No parties to any contract are named or men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the funds given for and on behalf of the ULBs (Urban Land Bodies) of the State Government. We also find that the State Government also directs the assessee to make use of the funds collected such as land premium, ground rent, etc on behalf of the Government and according permission for the same to be invested in bank for onward utilisation of its earmarked purpose." (3) The Hon'ble ITAT accordingly observed in paragraph 7.1 that the assessee abovenamed was "an agent of the Government" "and had merely acted as a custodian of funds belonging to the Government". Such Order of the ITAT dated 8.9.2017 has since attained finality in view of the appeal thereagainst before the Hon'ble High Court at Calcutta being dismissed by Order dated December 19, 2019 in Appeal No. ITAT 230 of 2018 (vide page 32 of Compilation dt. 24.4.2014) (4) Such view of the Hon'ble ITAT can be verified from the Notifications issued under the TCP Act, as contained in pages 74 to 78 of the Compilation dt. 24.4.2014, and pages 194 to 199 of the Paper Book dt. 15.7.2014. Such notifications are self-explanatory inasmuch as they clearly establish that from the opening of bank accounts, the management of funds, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e collected thereunder "as arrears of land revenue" and that every development authority "shall keep in current account in any branch of the State Bank of India or any other Bank approved by the State Government in this behalf, such portion of its fund as may be prescribed and any money in excess of the said sum shall be invested in such manner as may be approved by the State Government." 3.4 No leave of CBEC taken prior to initiating adjudication against the assessee abovenamed in violation of Circular dt. 10.11.2006 (1) By the said Circular dated 18.12.2006, the CBEC had clarified that services rendered in pursuance of mandatory and statutory function are in public interest and hence, cannot be taxable under the Act. Notably, by another Circular No. 354/59/2006-TRU dated November 10, 2006, the CBEC had also instructed that "in any case where it is proposed to levy service tax on a service provided by a department of the central government or state government, the same may be referred to the Board". No such leave appears to have been taken by the Department in the present case however before proceeding against the assessee abovenamed (see page 29 of the Compilation dt. 24.4.202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 129 (SC) (vide page 96 of Compilation dt. 24.4.2024), it was observed that that user development fee collected by private licensees of Airport Authority of India for providing services in passenger lounges, rest rooms and other facilities in airports or in relation to passenger amenities, is in the nature of a statutory levy which is monitored and regulated by law in public interest and is hence, not taxable under the Act (see paragraphs 1, 7, and 39 at pages 96, 98 and 103 of the Compilation dated 24.4.2024 respectively). (4) Such view that services rendered in pursuance of statutory obligation are not taxable under the Act, has been reiterated recently by the Principal Bench of this Hon'ble Tribunal, in Directorate of Agricultural Engg. v PCC, Bhopal, 2023 (73) GSTL 377 (T) (vide page 134 of the Compilation dt. 24.4.2024) 5. Based on the above submissions, he prays that the present appeal filed by the assessee ADDA may be allowed on merits. 6. The Ld. Counsel also makes a submission on the ground the entire proceedings are time-barred. He submits that the ADDA is a statutorily created body by the State Govt and is undertaking sovereign functions by collecting amounts on behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) transport of goods or passengers; or (iv) [Any service], other than services covered under clauses (i) to (iii) above, provided to business entities; SECTION 65B. Interpretations. - In this Chapter, unless the context otherwise requires,- '(26A) "Government" means the Departments of the Central Government, a State Government and its Departments and a Union territory and its Departments, but shall not include any entity, whether created by a statute or otherwise, the accounts of which are not required to be kept in accordance with Article 150 of the Constitution or the rules made thereunder;' Article 150 - The Constitution Of India : 150. Form of accounts of the Union and of the States. The accounts of the Union and of the States shall be kept in such form as the President may, on the advice of the Comptroller and Auditor General of India, prescribe 13. Coming to the factual matrix of the present case : (1) ASANSOL DURGAPUR DEVELOPMENT AUTHORITY [ADDA] is a notified government agency constituted under Sections 11 (1) and 11 (3) of The West Bengal Town and Country (Planning and Development) Act, 1979 (henceforth "TCP Act") read with Notification No. 1881/T&CP/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we have no hesitation to come to a conclusion that ADDA is performing sovereign functions on behalf of the State Government of West Bengal. 15. The Bangalore Bench of CESTAT in the case of Karnataka Industrial Areas Development Board v. CCT, Bangalore (North), 2020 (40) GSTL 33 (T), the coordinate Bench of Bangalore has held as under : 7.3 The issue whether the statutory authority performing statutory functions as provided under a statute is liable to service tax or not has been considered and decided by catena of judgments rendered by various Courts. In the case of Maharashtra Industrial Development Corporation (MIDC) cited supra, the Hon'ble Bombay High Court has categorically held that no service tax could be demanded on the charges collected by the MIDC, in terms of MID Act, 1961 towards maintenance of industrial areas as the same is in the nature of statutory function performed in terms of the statute. It is pertinent to quote the relevant findings of the Bombay High Court, in paras 5, 6, 7 :- 5. We have given careful consideration to the submissions. Firstly, it will be necessary to note what is set out in the circular dated 18th December, 2006 bearing No. 89/7/2006. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bombay High Court has held in MIDC case as under :- 11. The Apex Court categorically held that functions and powers of MIDC indicate that the said Corporation is acting as a wing of the Government. In the case of Managing Director, Haryana State Industrial Development Corporation, the Apex Court was considering the role played by Haryana State Industrial Development Corporation. The Apex Court held that the said Corporation discharges sovereign functions. The Apex Court also held that considering the objects and purport for which the said Corporation of Haryana has been constituted, the function discharged by the Corporation must be held as Governmental function. 14. MIDC is a statutory Corporation which is virtually a wing of the State Government. It discharges several sovereign functions. In our view, the Revenue ought not to have compelled MIDC to prefer Appeals before Appellate Tribunal. Not only that MIDC was driven to prefer Appeals before the Appellate Tribunal, these groups of Appeals were preferred by the Revenue. Needless to add that MIDC was required to incur huge expenditure on litigation. All this could have been avoided by the Appellant. When the maintenance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a statute can be considered as 'provision of service' for the purpose of levy of service tax. 2. The issue has been examined. The Board is of the view that the activities performed by the sovereign/public authorities under the provision of law are in the nature of statutory obligations which are to be fulfilled in accordance with law. The fee collected by them for performing such activities is in the nature of compulsory levy as per the provisions of the relevant 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. 3. However, if such authority performs a service, which is not in the nature of statutory activity and the same is undertaken for a consideration not in the nature of statutory fee/levy then in such cases, Service Tax would be leviable, if the activity un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Sewerage connection 1968279 Hording Charges 3163342 Sub-lifting & Way lease 1018750 Sche-12/2 Water connection charge 2663666 Total:- 2008-09 18685020 0 18685020 12% 2242202 44844 22422 2009-10 633835526 0 633835526 10% 63383 1267671 633836 2010-11 1381246670 17604744 1363641926 10% 136364 272728 1363642 2011-12 694903410 0 694903410 10% 69490341 138980 694903 Total 2747254328 17604744 2729649584 273710333 5474207 2737103 20. A careful reading of the Board Circular dated 18.12.2006, would clarify that all the amounts collected by the statutory body would not get automatically exempted from payment of Service Tax on a blanket basis. Only those charges / fees, which are compulsory / mandatory and which are levied and collected on behalf of the Govt. would be exempt from payment of Service Tax, since this would be in the nature of performing sovereign func ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 231 17,74,821 Total 24,23,05,114 2,86,87,771 5,73,754 2,86,876 2,95,48,401 23. The quantification arrived service-wise is as per the Schedule to Balance Sheet as per the OIO. But we find from the SCN Annexure, such bifurcation for demanding the Service Tax on year-wise basis is missing in the Annexure B to the Show Cause Notice. In fact, for 2007-08 and 2008-08, the incomes have been bracketed under a generic heading, without giving the relevant amounts for the specific services. As has been observed above, the Licensing Fee, Land Development fee would be in the nature of compulsory fee / mandatory fee, being collected as part of sovereign function and hence would be exempted. But no bifurcation has been carried out in the Annexure B to SCN, wherein the quantification is done. 24. In respect of 2009-10, 2010-11 and 2011-12, even the above perfunctory work has not been undertaken. Simply the value shown in the Balance Sheet / Bank Statement have been taken to quantify the demand. Therefore, we see considerable force in the argument of the appellant that quantification of demand is neither scientific nor is properly backed by any concrete documentary evidence. More than Rs.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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