Custom, Excise & Service Tax Tribunal
Patna Municipal Corporation vs Patna on 3 June, 2025
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 76223 of 2014
(Arising out of Order-in-Original No. 12/S.T./Commissioner/2014 dated 06.06.2014
passed by the Commissioner of Central Excise and Service Tax, Patna
Commissionerate)
M/s. Patna Municipal Corporation : Appellant
Maurya Lok Complex,
Patna - 800 001
VERSUS
Commissioner of Central Excise and Service Tax : Respondent
Patna Commissionerate
APPEARANCE:
Shri Shikesh Jha, Advocate, for the Appellant
Shri Debapriya Sue, Authorized Representative,for the Respondent
CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO. 76410 / 2025
DATE OF HEARING: 29.04.2025
DATE OF DECISION: 03.06.2025
ORDER:[PER SHRI K. ANPAZHAKAN] The present appeal has been filed by M/s. Patna Municipal Corporation (hereinafter referred to as the "appellant") against the Order-in-Original No. 12/S.T./Commissioner/2014 dated 06.06.2014 wherein the demand of Service Tax of Rs.1,50,37,382/- (inclusive of cesses) has been confirmed against them, along with interest, and a penalty of Rs.1,50,37,382/- has been imposed under Section 78 of the Finance Act, 1994. Further penalties under Section 77(1)(a) and 77(1)(c) of the said Act have also been imposed on the appellant, besides levy of late fee under Section 70 of the Finance Act, 1994 read with Rule 7(c) of the Service Tax Rules, 1994.
Page 2 of 10Appeal No.: ST/76223/2014-DB
2. The Ld. Counsel appearing on behalf of the appellant submits that the demand of Service Tax has been confirmed in the impugned order under the category of "renting of immovable property" service in respect of the following six different categories in respect of which the appellant had received considerations: -
(1) Rents collected from shops by the Municipal Corporation through their circles (2) Rents collected from shops of / by Patna Regional Development Authority (3) Payment received from lease (4) Payment received from Licence Fee of Mobile Towers (5) Payment received from any other type of Rent and Licence Fee (6) Payment received as rent from Bus Terminal [ISBT (Inter State Bus Terminal) daily collection] 2.1. Regarding the amount of Rs.5,92,679/-
demanded on the rent collected from shops / stalls during the period from 2007-08 (06/07 to 03/08) to 2009-10 in respect of category (1) above, the Ld. Counsel for the appellant submits that they have agreed to the said demand and are not contesting the same.
2.2. Regarding the amount of Rs.1,96,800/- demanded on the rent collected from Guest Houses / shops and Space / Kiosks / Stalls / Grounds / Telephone Booths of Patna Regional Development Authority (PRDA) (presently merged with PMC) during Page 3 of 10 Appeal No.: ST/76223/2014-DB the period from 2007-08 (06/07 to 3/08) to 2009-10, pertaining to category (2) above, also, the appellant has agreed to the said demand and not contesting the same.
2.3. With regard to the demand of Rs.56,90,044/- demanded on the amounts received by the appellant as instalments of lease of shops during the period from 2007-08 (6/07 to 3/08) to 2009-10 [category (3)], it is the contention of the appellant that these amounts were not received as 'rent' on a monthly basis. It is their submission that the said amounts have been received by them only as instalments of the lease amount from the said shops, which is not liable to Service Tax under the category of "renting of immovable property" service.
2.4. With regard to the demand of Rs.35,29,439/- demanded on the Licensing Fee from mobile towers during the period from 2007-08 (6/07 to 3/08) to 2009-10, pertaining to category (4) supra, the appellant submits that this amount is not collected as 'rent' and hence, cannot be held liable to Service Tax under the category of "renting of immovable property"
service on this count.
2.5. With regard to the demand of Rs.3,17,141/- raised against the appellant for the periods 2010-11 and 2011-12 [category (5)], the appellant contends that the impugned order has failed to specify as to under which part of the definition of 'renting of immovable property' the said amount has been categorized and hence the demand of Service Tax confirmed in this regard is untenable.Page 4 of 10
Appeal No.: ST/76223/2014-DB 2.6. Further, on the demand of Rs.47,11,279/- in respect of rent from Bus Terminal [ISBT (inter State Bus Terminal) daily collection] under erstwhile PRDA (now merged with PMC), under category (6) above, it is the contention of the appellant that this amount has been collected from the bus corporations for parking their buses overnight and as such, the said activity cannot be termed as 'renting'. Accordingly, the appellant contends that the demand of Service Tax confirmed under the category of "renting of immovable property" service on this count is not sustainable.
2.7. In view of the above submissions, the Ld. Counsel for the appellant submits that the demands confirmed in respect of categories (3), (4), (5) and (6) mentioned above, are not sustainable and prayed for setting aside these demands along with interest and penalties.
2.8. Further, it is also the plea of the appellant that since they have not suppressed any information from the Department and also filed their Returns, the demand confirmed against them by invocation of the extended period of limitation is not sustainable. Accordingly, the appellant prays for setting aside the demands confirmed by invoking the extended period of limitation and the penalties imposed on them in the impugned order.
3. On the other hand, the Ld. Authorized Representative of the Revenue reiterated the findings in the impugned order. In support of his contentions, he also placed reliance on the decision in the case of Hobbs Brewers India Pvt. Ltd. v. Union of India [2016 (45) S.T.R. 60 (Tripura)], wherein the demand has been confirmed on a similar issue.Page 5 of 10
Appeal No.: ST/76223/2014-DB
4. Heard both sides and perused the appeal records.
5. We observe that the demands have been confirmed in the impugned order under "renting of immovable property" service as defined under Section 65(105)(zzzz) of the Finance Act, 1994 read with Section 65(90a) of the said Act. We observe that in the instant case, the demand has been confirmed against in the impugned order under 'renting of immovable property' service under six different categories on which the appellant received considerations.
5.1. In respect of the first category, we observe that a demand of Service Tax of Rs.5,92,679/- has been confirmed on the rent collected from shops / stalls during the impugned period. We find that the appellant has accepted this demand and it is not being contested in this appeal. Therefore, we hold that the appellant is liable to pay the above demand of Service Tax, along with interest, if not already paid. However, we observe that the appellant has not suppressed any information from the department and hence intention to evade payment of Service Tax cannot be attributed to the appellant. For this reason, we hold that no penalty is imposable on the appellant in respect of this demand confirmed and upheld along with interest.
5.2. Similarly, regarding the demand of Service Tax of Rs.1,96,800/- confirmed on the second category i.e., rent collected from Guest Houses / shops and Space / Kiosks / Stalls / Grounds / Telephone Booths of Patna Regional Development Authority (PRDA) (presently merged with PMC), we find that the appellant has accepted their service tax liability on this count. Hence, we uphold the above demand of Page 6 of 10 Appeal No.: ST/76223/2014-DB Service Tax, along with interest, and the same is liable to be paid, if not paid already. However, since there is no intention on the part of the appellant to evade payment of Service Tax, no penalty is imposable on this count.
6. Regarding the demand of Service Tax of Rs.56,90,044/- confirmed in respect of category (3) supra, we observe that the said demand has been raised on the amounts received by the appellant in connection with leasing of shops, which stands squarely covered under the definition of "renting of immovable property" service. For the sake of ready reference, the definition of "renting of immovable property" during the relevant period is reproduced below: -
Section 65(90a)"renting of immovable property"
includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce.
6.1. Further, as per Explanation (1) to Section 65(105)(zzzz) of the Finance Act, 1994, "immovable property" includes --
(i) building and part of a building, and the land appurtenant thereto;
(ii) land incidental to the use of such building or part of a building;
(iii) the common or shared areas and facilities relating thereto; and
(iv) in case of a building located in a complex or an industrial estate, all common areas and facilities relating thereto, within such complex or estate, Page 7 of 10 Appeal No.: ST/76223/2014-DB 6.2. From the definition of "renting of immovable property" service reproduced above, we observe that 'leasing' of immovable property has been specifically covered in the definition. Accordingly, we uphold the demand of Service Tax in this regard and hold that the same is payable by the appellant, along with interest.
However, we do not see any reason to impose penalties in respect of this demand confirmed as there is no intention to evade payment of Service Tax established on the part of the appellant on this count.
7. Coming to the demand of Service Tax of Rs.35,29,439/- confirmed in respect of category (4) mentioned above, it is observed that this demand pertains to the Licensing Fee from mobile towers received during the impugned period. We find that these are in the nature of granting permission to the companies to erect and maintain their mobile towers. Such payments for acquiring the permission cannot be considered as 'rent' to fall within the definition of 'renting of immovable property' service as defined under Section 65(105)(zzzz) of the Finance Act, 1994.
7.1. In this regard, we have examined the decision relied upon by the Ld. Authorized Representative of the Revenue in the case of Hobbs Brewers India Pvt. Ltd. v. Union of India [2016 (45) S.T.R. 60 (Tripura)]. However, we find that the said case is related to lease of land for setting up of a manufacturing unit. In the present case what is being collected is a 'licensing fee' for granting permission and not a periodical rent, as alleged. Thus, the case-law relied upon by the Revenue is distinguishable on facts.
7.2. Hence, we hold that the demand confirmed in the impugned order in this regard is not sustainable and accordingly, the same is set aside. As the Service Page 8 of 10 Appeal No.: ST/76223/2014-DB Tax demand in this regard does not survive, the question of imposing penalties or demanding interest does not arise.
8. As regards the demand of Rs.3,17,141/- confirmed in the impugned order, we find that the ld. adjudicating authority has failed to specify the specific part of the definition under which the activity of the appellant falls. In these circumstances, we hold that the demand of Service Tax confirmed on this count under the category of "renting of immovable property"
cannot be sustained and therefore, we set aside the same.
9. We further observe that a demand of Rs.47,11,279/- has been confirmed on the amount received from Bus Terminal [ISBT (Inter State Bus Terminal)]. The Ld. Consultant appearing for the appellant has informed that the said charges are collected to allow the buses to be parked in the ISBT Terminus. On examination of the nature of the service rendered in this regard, we are of the opinion that the said activity does not fall within the definition of 'renting of immovable property' as it is meant for parking of the buses overnight, as has been pointed out by the appellant. Consequently, we hold that there is no liability to Service Tax on the said charges collected by the appellant under the category of 'renting of immovable property service'. Accordingly, we hold that the demand of Service Tax confirmed in this regard is not sustainable and hence the same is set aside.
10. We also take note of the submission of the appellant that the demands have been raised only on the basis of the documents maintained and furnished by the appellant. It is observed that the appellant has Page 9 of 10 Appeal No.: ST/76223/2014-DB not suppressed any information and had no intention to evade payment of Service Tax. Accordingly, we hold that the penalties imposed on the appellant under Sections 78, 77(1)(a) and 77(1)(c) of the Finance Act, 1994 are not sustainable and hence the same are set aside.
10.1. However, we observe that there were delays in filing the Returns by the appellant and hence we do not interfere with the late fee imposed under Section 70 of the Finance Act, 1994 read with Rule 7(c) of the Service Tax Rules, 1994 for failure to furnish their Returns in time. The same is therefore sustained.
11. To summarize our above findings: -
(i) The demand of Rs.5,92,679/- on rent collected from shops / stalls is upheld, along with interest. However, no penalty is imposable in this regard.
(ii) The demand of Rs.1,96,800/- on rent received from Guest Houses / shops and Space / Kiosks / Stalls / Grounds / Telephone Booths of Patna Regional Development Authority (PRDA) is upheld, along with interest. However, no penalty is imposable in this regard.
(iii) The demand of Rs.56,90,044/- in respect of instalments of lease amount of shops is upheld, along with interest. However, no penalty is imposable in this regard.
(iv) We set aside the demand of Rs.35,29,439/-
on Licensing Fee collected for granting permission to erect and maintain the mobile towers.
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(v) The demand of Rs.3,17,141/- is set aside.
(vi) We set aside the demand of Rs.47,11,279/-
confirmed on the amount received for parking the buses at the Bus Terminal [ISBT (Inter State Bus Terminal)].
(vii) The penalties imposed on the appellant under Section 78, 77(1)(a) and 77(1)(c) of the Finance Act, 1994 are set aside.
(viii) The imposition of late fee under Section 70 of the Finance Act, 1994 read with Rule 7(c) of the Service Tax Rules, 1994 is upheld.
12. The appeal is disposed of on the above terms.
(Order pronounced in the open court on 03.06.2025) Sd/-
(ASHOK JINDAL) MEMBER (JUDICIAL) Sd/-
(K. ANPAZHAKAN) MEMBER (TECHNICAL) Sdd