Custom, Excise & Service Tax Tribunal
Assam State Transport Corporation vs Guwahati on 22 March, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 75051 of 2014
(Arising out of Order-in-Original No. 06/Commr/ST/GHY/13-14 dated 24.10.2013
passed by the Commissioner of Central Excise and Service Tax, Guwahati, Sethi Trust
Building, G.S. Road, Bhangagarh, Guwahati - 781 005)
M/s. Assam State Transport Corporation : Appellant
Paribahan Bhawan, Paltan Bazar,
Guwahati - 781 008 (Assam)
VERSUS
Commissioner of Central Excise and Service Tax : Respondent
Sethi Trust Building, G.S. Road, Bhangagarh, Guwahati - 781 005 APPEARANCE:
Shri Devaraj Sahu, Advocate for the Appellant Shri K. Chowdhury, Authorized Representative for the Respondent CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL) FINAL ORDER NO. 75610 / 2024 DATE OF HEARING: 08.03.2024 DATE OF DECISION: 22.03.2024 Order : [Per Shri K. Anpazhakan] Assam State Transport Corporation, is a statutory corporation, incorporated by Govt. of Assam under the provisions of the Road Transport Corporations Act, 1950, to give effect to adequate, efficient and economic transport facility to the public, as contemplated under the provision of the said Act.
2. In order to achieve its legal obligations and to provide efficient and economic transport facilities to 2 Appeal No.: ST/75051/2014-DB the public in the State of Assam and the neighbouring states in the North East, the Appellant made a scheme of arrangement with private bus owners, and acquired near about 1,200 private owned buses in the state of Assam to ply on the 600 Nationalized Routes on an arrangement that the appellant shall reimburse 90 % of the revenue earned by a particular private owned bus towards their running and maintenance expenses and 10 % shall be shared towards administration expenses of the Appellant. The 10 % amount retained by the appellant is shown as revenue income of the appellant under the accounting head 'Revenue from Private Owned Buses'.
2.1. The Revenue is of the view that the appellant has provided various category taxable services such as "Business Support Service", Renting of Immovable Property Service' and Sale of space and Time for Advertisement Service' and has not discharged its Service Tax liabilities.
2.2. Accordingly, a Show Cause Notice dated 15.10.2012 was issued to the appellant demanding service tax of Rs.6,81,90,106/-, including Cess, for the period 01.04.2007 to 31.12.2012. The Notice was adjudicated by the Ld. Commissioner vide Order-in- Original No. 06/Commr/ST/GHY/13-14 dated 24.10.2013, wherein the Ld. Commissioner has confirmed the demand of service tax of Rs.6,75,66,180/- along with interest and penalty. He dropped the demand of service tax of Rs.6,23,928/- for the period 01.06.2007 to 31/03/2012 demanded under the category of 'Business Support Service'. Aggrieved against the confirmation of the demands, the appellant has filed this appeal.
3Appeal No.: ST/75051/2014-DB
3. The appellant submits that the entire demand confirmed in the impugned order is barred by limitation. In this case, the Show Cause Notice has been issued beyond one year from the due date of filing of Half Yearly Returns . The appellant submits that the department is well aware of the activities of the appellants on implementation of Private Owned Buss Scheme, 2001 and raised demand for the same service under Business Auxiliary Service . The said demand was confirmed vide Order-in-
Original/ST/Shillong No.03/2007 which is stayed by this Tribunal by its Stay Order No. S - 343/Kol/08 dated 07.05.2008. The department at this stage cannot claim wilful suppression of fact and demand service tax for the same service under different heads of service such as, Business Support Service, Renting on immovable properties and providing Time & Space for Advertisement service. There is no evidence against the appellant for intentional suppression of fact to the department. Hence, extended period of limitation cannot be invoked in the present case. Accordingly, the appellant submits that the impugned Order is not sustainable on the grounds of limitation.
3.1. Regarding the demand of service tax of Rs.6,24,01,668/- under the category of 'Business Support Service', the appellant submits that they are engaged in providing stage carriage transport services to passengers' in the state of Assam in terms of the power conferred on under the State Road Transport Corporation Act, 1950. The stage carriage transport is not covered under the Finance Act, 1994 and no service tax is leviable on stage carriage transport of passengers. The Ld. adjudicating authority has erred holding that the appellant corporation is carrying on 4 Appeal No.: ST/75051/2014-DB Business Support Services to the private transport operators. The appellant Corporation is established by the State Govt. only to provide adequate, efficient and economic road transport service to the public. In view of the prevailing financial condition of the corporation, the appellant was unable to own sufficient number of busses to ply on the 602 nationalized routes and accordingly, the Corporation acquired passenger carrying vehicles from the private owners to ply busses on 602 Nationalized Routes specified by the State Govt. in the public interest. The appellant, being a statutory Corporation, has no authority to permit other persons to run their vehicles on their own, on payment of some amount to the Corporation. Accordingly, the appellant submits that the activity undertaken by them cannot be considered as 'Business Support Services' promoting the business of the private transport operators. . The ld. adjudicating authority has held in the impugned order dated 24.10.2013 that the appellant has provided infrastructural support service to the private bus owners for smooth operation of the private buses and thereby the appellant is providing business support to the private bus owners. The appellant corporation is neither a business organization nor providing any business support services to any private bus owners but carries on its activities in the interest of general public. Thus, the appellant contended that the demand of service tax under the category of as 'Business Support Services' in the impugned order is not sustainable.
3.2. Regarding the demand of service tax of Rs.48,15,642/-under the category of 'Renting of Immovable Property service', the appellant submits 5 Appeal No.: ST/75051/2014-DB that the Corporation is not set up for any commercial purposes. The Appellant, being a non-profit making statutory body, has provided the spaces to stall owners at various places for the benefit of the passengers to arrange their necessity during the journey. Whatever, amount collected by them is not as rent, rather receipt towards lease/license fee from the stall owners which were used for the benefit of the passengers in the public interest. Hence, the amount received towards rentals or lease/license fees from stall owners is not liable to service tax under the category of 'Renting of Immovable Property Service'.
3.3. Regarding the demand of service tax of Rs.3,48,870/- under the category of 'Time & Space for Advertisement Services' the appellant submits that in order to cover the activity under taxable net as defined under Sec. 65(105)(zzzm), the service provider and service recipient both must be a 'person' . In this instant case, the service provider is not a 'person' in terms of the provisions of Sec. 3(42) of the General Clauses Act, 1897. Hence no service tax is leviable on the appellant. Accordingly, the appellant submits that the demand confirmed in the impugned order on this count is not sustainable.
4. The Ld. Authorized Representative appearing on behalf of the Revenue reiterated the findings in the impugned order.
5. Heard both sides and perused the appeal records.
6. We observe that the appellant raised the issue of limitation and contended that extended period cannot be invoked in this case to demand service tax. We observe that a Show Cause Notice has already been issued to the appellant on the same issue of 6 Appeal No.: ST/75051/2014-DB implementation of Private Owned Buss Scheme, 2001 and a demand has already been raised under the category of 'Business Auxiliary Service' . Thus, the department is well aware of the activities of acquiring buses by the appellant from private operators for carrying passengers. Now, Notice has been again issued for the same activity under various categories of taxable service such as "Business Support Service, Renting on immovable properties and providing time & space for Advertisement service, by invoking the extended period. We observe that the appellant has been filing returns regularly and the activities of appellant is well within the knowledge of the department. Accordingly, we hold that the department at this stage cannot claim wilful suppression of fact intending evade payment of service tax on the part of the appellant and raise the demand again by invoking extended period, as held by the Hon'ble Apex Court in the case of Nizam Sugar Factory v. Collector of C.Ex, A.P.[2008 (9) S.T.R. 314 (S.C.)]. Accordingly, we hold that the impugned Order is not sustainable on the grounds of limitation.
7. Regarding merits of the issue, we observe that the demand has been confirmed under three different categories of services namely, Business Support Service, Renting on immovable properties and providing time & space for advertisement service.
7.1. Regarding the demand of service tax of Rs.6,24,01,668/- under the category of 'Business Support Service', we observe that the adjudicating authority has held that the appellant has provided infrastructural support service to the private bus owners for smooth operation of the private buses and thereby the appellant has provided business support 7 Appeal No.: ST/75051/2014-DB to the private bus owners. In this regard, it is required to examine the definition of 'Business Support Srervice'.
7.2. Sec. 65(104c) of the Finance Act, 1994 which defines 'Business Support Service' as under:
[(104c) "Support services of business or commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfillment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, [Operational or administrative assistance in any manner], formulation of customer service and pricing policies, infrastructural support services and other transaction processing.
Explanation. -- For the purposes of this clause, the expression "infrastructural support services"
includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security;] 7.3. We observe that the adjudicating authority has considered the activities undertaken by the appellant as proving of infrastructural support service for the private bus operators and hence classified the activities under the category of 'Business Support Service' and confirmed service tax under the said category. We observe that the appellant corporation 8 Appeal No.: ST/75051/2014-DB has acquired the passenger vehicles having road worthiness to meet their requirement for the efficient, adequate and economic passenger transport services, in public interest, The appellant, being a statutory Corporation , has no authority to permit other persons to run their vehicles on their own, on payment of some amount to the Corporation. From the plain reading of the definition of Sec.65(104c) of the Finance Act, 1994 reproduced above, we observe that the activity of providing parking and receipt of entry fee is not covered under the clauses mentioned under the definition of Business Support Service. Accordingly, we hold that that the activity undertaken by the appellant cannot be considered as 'Business Support Services' promoting the business of the private transport operators. Hence, we hold that the demand confirmed in the impugned order under the category of 'Business Support Services' is not sustainable.
8. Regarding the demand of service tax of Rs.48,15,642/-under the category of 'Renting of Immovable Property service', we observe that the appellant has rented out immovable property for a consideration. In their submissions, the appellant contended that they are not a commercial concern. They are a non-profit making statutory body. They have provided the spaces to stall owners at various places for the benefit of the passengers to arrange their necessity during the journey. Whatever, amount collected by them cannot be considered as 'rent' and used the same has been used towards providing amenities for the passengers in the public interest. Hence, the amount received towards rentals or lease/license fees cannot be considered as 'consideration' received for taxable services. We do 9 Appeal No.: ST/75051/2014-DB not agree with the argument of the appellant. We observe that the stalls and shops have been rented out for commercial purposes. We observe that there ia an instance where the premises have been leased out to Gold Cinema, (M/s. Agile Associates), for cinema show. Thus, we hold that the appellant has rented out the properties for commercial purposes and received consideration towards such services. Thus, we observe that the appellant is liable to pay service tax under the category of 'Renting of Immovable property service'. However, as discussed in para 6 supra, there is no suppression of fact involved in this case. Accordingly, the demand, if any, under this category of service is restricted to normal period of limitation only.
9. Regarding the demand of service tax of Rs.3,48,870/- under the category of 'Time & Space for Advertisement Services', we observe that the appellant is not an advertisement agency. Further, we observe that 'Sale of Space and time for advertisement' has been brought under the ambit of service tax net only w.e.f. 01.05.2006. In the present case, the demand under this category has been raised for the period 2007-08 to 2011-12. As per the table mentioned in para 16.8 of the Show Cause Notice, we observe that the entire demand is confined to the period 2007-08 to 2009-10. There was no receipt under this category during the financial years 2010-11 and 2011-12. Accordingly, we find that the entire demand under this category is barred by limitation. Hence, no demand confirmed in the impugned order survives under this category.10
Appeal No.: ST/75051/2014-DB
10. Regarding penalty imposed on the appellant, we observe that there is no evidence of wilful suppression of fact intending evasion of payment of service tax in this case. Accordingly, we hold that the penalty imposed on the appellant is not sustainable and hence we set aside the same.
11. In view of the above discussions, we pass the following order.
(i) The demands confirmed in the impugned order by invoking extended period is not sustainable.
(ii) The demand of service tax confirmed under the category of 'Business Support Service' is not sustainable.
(iii) The appellant is liable to pay service tax under the category of 'Renting of Immovable Property service' for the normal period of limitation.
(iv) The entire demand of service tax underthe category of 'Time & Space for Advertisement Services' is beyond the normal period and hence the demand under this category is not sustainable.
(v) No penalty imposable on the appellant.
(vi) The appeal filed by the appellant is disposed of on the above terms.
(Order pronounced in the open court on 22.03.2024) Sd/- Sd/-
(K. ANPAZHAKAN) (ASHOK JINDAL) MEMBER (TECHNICAL) MEMBER (JUDICIAL) Sdd