Custom, Excise & Service Tax Tribunal
Karad Nagar Parishd vs Commissioner Of Central Excise & ... on 5 January, 2018
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. ST/85050/14 & ST/86031/14 (Arising out of Order-in-Original No. KLH-EXCUS-000-COM-007-13-14 dt. 01/10/2013 passed by the Commissioner of Central Excise, Kolhapur ) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) Honble Shri Raju, Member (Technical) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
=======================================================
Karad Nagar Parishd
:
Appellant
VS
Commissioner of Central Excise & Service Tax, Kolhapur,
:
Respondent
Appearance
Shri Makrand Joshi, Advocate for Appellant
Shri M.P. Damle, Asstt.Commr. (A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Honble Shri Raju, Member (Technical)
Date of hearing : 05/01/2018
Date of pronouncement : 29/01/2018
ORDER NO.
Per : Ramesh Nair
The fact of the case is that the appellant M/s. Karad Nagar Parishad is a Government Municipal Corporation and providing various services namely- Renting of Immoveable Property, Mandeep Keeper, Advertisement, Supply of Tangible Goods. Revenue sought to levy service tax on the above services provided by the appellant to the general public. As per the impugned order the following demands confirmed:
Demand of Service Tax Service Amount (Rs.) Renting of Imm. Property 71,41,536.00 Mandeep Keeper 3,42.210.00 Advertisement 54,560.00 Supply of Tangible Goods 3,086.00 Total 75,41,392.00 Penalty Failure to take Registration Sec. 77 and 77 (1) 10,000-00 Suppression Sec. 78 75,41,392.00 Failure to pay tax Section 76 75,41,392.00 Period of Dispute April 2007 to November 2011 SCN 18th October 2012
2. Shri M.P. Joshi, Ld. Counsel appearing on behalf of the appellant submits that they do not contest the service tax demand of Building Rent, Mandeep Keeper, Supply of Tangible Goods. However they contest the demand on the deposit received against the renting of immoveable property. He submits that the deposit is an advance deposit against the renting of building as well as the deposit on other counts such as against various tenders. It is his submission that deposit of any kind is advance deposit and not the consideration towards the any services therefore the same is not liable for service tax. In this regard he placed reliance on the following judgments of this Tribunal :
(i) Samir Rajendra Shah Vs .Commissioner of Central Excise, Kolhapur 2015 (37) STR 154 (Tri.-Mumbai)
(ii) Murli Realtors Pvt. Ltd. Vs. Commissioner of Central Excise, Pune III 2015 (37) STR 618 (Tri.-Mumbai).
As regard demand of Land Rent and Bazaar Land Rent, it is recovered for providing vacant land. It is a statutory fee and covered under the sovereign function of the Government body therefore the same is not taxable. He also placed reliance on the Commissioners order in the case of Satara Nagar Parishad who is identically placed Municipal Corporation, in that case the Commissioner vide order dt. 20.3.2014 dropped the demand which has been accepted by the department therefore the activity of appellant being identical the same should not be taxed. As regard the Slaughter house fees, he submits that under Article 243W of Constitution read with Twelfth Schedule, the Regulation of Slaughter houses and tanneries appearing at Sr. No. 18 of the Schedule. It is a sovereign function therefore on any fees connected towards performance of sovereign function, service tax cannot be charged. As regard the service tax on so called advertisement i.e. Sale of Space or Time, he submits that the appellant have not sold the space for advertisement, whereas they have collected the advertisement tax. As evident from the receipt of the Municipal Corporation given against the recovery of advertisement tax therefore the advertisement tax being a statutory levy filed under the sovereign function under the Municipal Corporation, the same cannot be taxed. He further submits that the appellant being a Municipal Corporation and Corporation of Government, there cannot be a malafide intention or suppression of fact to evade the service tax , therefore neither extended period should be invoked nor penalty. In this regard he placed reliance on the following judgements:
(i) Brihanmumbai Municipal Corporation Vs. Commissioner of Service Tax, Mumbai (2017-TIOL-1846-CESTAT-MUM
(ii) Municipal Corpn. Rajahmundry Vs. CST & C.Ex, Visakhapatnam 2017 (5) G.S.T.L. 78 (Tri.-Hyd.)
(iii) Commissioner of C. Ex., Goa Vs. Mormugao Municipal Council 2017 (7) G.S.T.L. 228 (Tri.-Mumbai).
3. Shri M.P. Damle, Ld. Asstt. Commr. (A.R.) appearing on behalf of the Revenue reiterates the finding of the impugned order. He further submits that regarding the submission of demand made on deposit, no documentary evidence was produced by the appellant. As regard the service tax on Land Rent and Bazar Land Rent, it is not coming out from the record that it is the same land rent which was decided in Satara Nagar Parishad case therefore it needs verification.
4. We have carefully considered the submissions made by both the sides. We find that the appellant have admitted the demand in respect of the Building Rent, Mandap Keeper and Supply of tangible goods therefore we uphold the demand on these services. As regard demand on the deposit, we find that if the amount of deposit is as advanced deposit towards the renting of immoveable property. The said deposit is considered as security deposit which is not part and partial of the rent, therefore the amount being deposit and not rent cannot be text. The appellant also submits that the deposit is not only towards the renting of building but it is related to other deposit made towards various tenders etc. However the adjudicating authority has not verified this fact we therefore direct the adjudicating authority to verify the facts. In this regard, it is made clear that if the amount represent the advanced deposit the same is not service charges, hence the same cannot be charged to service tax. As regard land rent and bazaar land rent. We find that the identical issue has been decided by the Commissioner vide order dt. 20.3.2014, in case identically placed Satara Nagar Parishad wherein the demand was dropped the order was attained finality. However, the Ld. AR raised the issue regarding the fact of the nature of land rent and bazaar land rent. We find that no evidence is on record to show that on what account the land rent and bazaar land rent is collected. However if this is under the same head which was existing in the case of Satara Nagpur Parishad then the same will not be chargeable to service tax, therefore the Commissioner needs to verify this aspect. As regard the Slaughter house fees we observed that as per the Schedule Twelfth of Article 243W, Regulation of Slaughter houses is the sovereign function of the Municipal Corporation. Therefore the fees collected towards the Regulation of Slaughter houses, the demand of Service Tax is hereby set aside. The service tax demand was also confirmed on the amount collected by the appellant towards advertisement. It is the submission of the appellant that it is not the service charges collected towards providing advertisement service by the appellant to the various persons, but it is an advertisement tax which is a statutory levy and collected for display the advertisement by any person at any place whether the place owned by the Corporation or by any individual therefore the advertisement tax being a statutory levy cannot be chargeable to service tax. It is observed from the receipt of the Municipal Corporation i.e. appellant that the amount towards so called advertisement was collected as Jahirat Kar (Advertisement Tax). We are of the view that the advertisement tax being statutory tax levy by the Municipal Corporation should not be liable to service tax. Hence we set aside the demand of service tax on this count. As regard the penalty imposed upon by the appellant. We find that appellant is a Government Municipal Corporation and not an individual. It cannot be imagined that the Government itself involved in suppression of fact with intent to evade service tax. Being non-existence of malafide intention no penalty can be imposed, accordingly, we set aside the penalties imposed against the appellant. As per our above discussion, the appeal is partly allowed and disposed of in the above terms.
(Pronounced in court on 29/01/2018)
(Raju)
Member (Technical)
(Ramesh Nair)
Member (Judicial)
SM.
6
ST/85050/14 &
ST/86031/14