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EDC paid by the Appellant to GAMADA is in the nature of statutory levy which is to be mandatorily deposited before the grant of license by GAMADA and is a compulsory levy under the provisions of law. The rates are also fixed by the Government by way of notifications No separate agreement has been entered into by the Appellant with GAMADA. Under these circumstances it cannot be said that the Appellant has paid EDC charges to GAMADA out of any contractual liability with GAMADA. GMADA has been authorized to collect the EDC charges as per the policy decision of the Govt, and not out of the free consent of the parties. The Appellant is required to deposit proportionate cost of infrastructure development which will be carried out by the State Government in the area where project is located but it does not mean that the External Development is carried out by the government on behalf of the developer / Appellant on account of its contractual liability. Merely because the developers are required to deposit EDC on account of proportionate cost of infrastructure development, would not constitute an agreement or a work contract. The External Development so as to connect the residential areas or industrial project with the main roads, system, water supply, sewerage/ drainage, electricity supply or any other works, so required are to be carried out by the Govt./ local authority out of its own responsibility and even if the contactor does not pay the EDC charges that does not absolve the government from carrying out the development works relating to the connectivity of the project. The government has also issued notifications from time to time so as to give concessions to the developer / promoters regarding EDC charges and also to formulate a policy regarding utilization of the EDC charges not only to provide infrastructure along with the approved project but also for the overall development of the area in general The State government vide its Notification No. 17/17/2001- 5HG2/PF/1817 dated 22.6.2010, has prescribed the rates, time and manner of deposit of EDC charges wherein the EDC charges have been explained as under:-

Thus, it can be said that in lieu of the benefits, concessions, incentives given by the government to the promoter for the purpose of development of infrastructure, the proportionate cost at fixed rates is to be deposited with the government by the promoter for external development work, yet, the development is carried out by the local authority out of its own obligations/ duties. The entire discussion can be summed up in the manner that though the promoter contributes towards the proportionate cost of infrastructure development, however, the works are not carried out by the local authority in consequence of specific performance of the agreement/ contract but out of its own obligations and duties towards the public. In view of this, since the agreement cannot be said to be a work / service contract, hence, the provisions of section 194C will not be attracted in this case.

On issue of whether, in any manner, there was a works or service contract between the assessee and GAMADA, the Hon'ble ITAT further held that:

"A perusal of all the clauses of the agreement, as discussed above, reveals that it is not a work or service contract between the parties. The various clauses of the agreement just show that if the assessee agrees to develop the infrastructure as per the policy of the Govt., then the assessee would be entitled to various concessions and incentives. However, the assessee is required to deposit proportionate cost of infrastructure development which will be carried out by the State Government in the area where project is located but it does not mean that the External Development is carried out by the government on behalf of the developer / assessee on account of its contractual liability. The Development of the external area is carried out by the Govt, so as to provide road connectivity, water supply connectivity, sewerage connectivity etc. to the project which also includes the acquisition of land by the Govt as may be required for such purpose. In our view, it will be illogical to say that the land is acquired/ agreed to be acquired by the Govt, in lieu of any work/ service contract with the assessee, external work is carried out by the Govt, /local authority out of its own responsibility. Merely because the developers are required to deposit EDC on account of proportionate cost of infrastructure development, would not constitute the agreement a work contract."

15. A perusal of all the clauses of the agreement, as discussed above, reveals that it is not a work or service contract between the parties. The various clauses of the agreement just show that if the assessee agrees to develop the infrastructure as per the policy of the Govt., then the assessee would be entitled to various concession and incentives. However, the assessee is required to deposit proportionate cost of infrastructure development which will be carried out by the State Government in the area where project is located but it does not mean that the External Development is carried out by the government on behalf of the developer / assessee on account of its contractual liability. The Development of the external area is carried out by the Govt. so as to provide road connectivity, water supply connectivity, sewerage connectivity etc. to the project which also includes the acquisition of land by the Govt. as may be required for such purpose. In our view, it will be illogical to say that the land is acquired/agreed to be acquired by the Govt. in lieu of any work/service contract with the assessee, external work is carried out by the Govt./local authority out of its own responsibility. Merely because the developers are required to deposit EDC on account of proportionate cost of infrastructure development, would not constitute the agreement a work contract. The External Development so as to connect the residential areas or industrial project with the main roads, system, water supply, sewerage / drainage, electricity supply or any other works, so required are to be carried out by the Govt./local authority out of its own responsibility and even if the contactor does not pay the EDC charges that does not absolve the government from carrying out the development works relating to the connectivity of the project. The government has also issued notifications from time to time so as to give concessions to the developer / promoters regarding External Development charges and also to formulate a policy regarding utilization of the EDC charges not only to provide infrastructure along with the approved project but also for the overall development of the area in general.