Punjab Infrastructure Management Co. Vs Commissioner of Central Excise and Service Tax (CESTAT Chandigarh)
Summary: The Customs, Excise and Service Tax Appellate Tribunal, Chandigarh, considered the appeal filed by M/s Punjab Infrastructure Management Co. against the Order-in-Original dated 30.01.2014 passed by the Commissioner of Central Excise, Chandigarh-II. The impugned order had confirmed service tax demand of ₹24,81,931/- under Section 73(1) of the Finance Act, 1994, along with interest under Section 75, penalty of ₹5000/- under Section 77 and penalty of ₹24,81,931/- under Section 78.
The Appellant had been engaged as a “management contractor” by the Government of Punjab/PUNBUS for operation and maintenance of bus terminals/bus stands at Nawanshahar and Moga. The Department treated the activity as taxable under the category of ‘Business Support Service’ and issued a Show Cause Notice dated 24.02.2012 invoking the extended period of limitation for the period December 2006 to September 2011.
The Appellant contended that the bus terminals were public utility infrastructure created and regulated by the State Government, that the adda-fee was fixed by the State Government and was merely collected by the Appellant under the Government mandate, and that there was no contractual arrangement between the Appellant and individual bus operators. It was therefore submitted that the essential ingredients of “Support Services of Business or Commerce” were absent. The Appellant also relied upon the decision in Rohan And Rajdeep Infrastructure Pvt Ltd Vs Commissioner of Central Excise & Service Tax (CESTAT Chandigarh).
The Tribunal identified the issue as whether the Appellant was liable to pay service tax under the category of “Support Services of Business or Commerce”. Following the ratio in Rohan And Rajdeep Infrastructure Pvt Ltd Vs Commissioner of Central Excise & Service Tax (CESTAT Chandigarh), the Tribunal held that collection of adda-fee under a State concession agreement, in the absence of a direct contractual relationship with bus operators, does not constitute “Business Support Service”.
The Tribunal reproduced and considered the reasoning in the earlier decision, including the principle that service tax is a contract-based levy and that the liability has to be determined with reference to the contract between the service provider and recipient. The reproduced discussion also referred to the decisions of the Madras High Court in Commr of CGST, Chennai vs. Wunderbar Films Pvt Ltd and the Gujarat High Court in Mohit Minerals Pvt Ltd.
On the facts of the present case, the Tribunal found that the Appellant had a contract with the State of Punjab and no contract with the bus operators for providing services. It further found that, at the time of entering into the contract with the State of Punjab, the Appellant could not have agreed to provide support services to unknown bus operators. The bus terminals were regarded as public utility services rather than infrastructure created to support the business of bus operators. Accordingly, the Tribunal held that service tax was not leviable under the business support services category.
The Tribunal also noted that the adda-fees were collected pursuant to the agreement with PIDB and that, at the most, such fees were in the nature of parking-fees which were exempt under ‘renting of immovable property services’. It further noted the project site lease deed under Schedule-X and found that the agreement between the Appellant and PIDB established that the services provided, if at all, were to PIDB and not to users of the bus-terminal.
Following the earlier Tribunal decision, the CESTAT Chandigarh held that the ratio was squarely applicable to the present facts and set aside the impugned order and allowed the appeal on merit. Since the appeal was allowed on merits, the Tribunal did not decide the issue of limitation.
Cases Discussed
- Rohan And Rajdeep Infrastructure Pvt. Ltd. Vs Commissioner of Central Excise & Service Tax (CESTAT Chandigarh) [2026 (2) TMI 236 – CESTAT Chandigarh]
- Commr of CGST, Chennai vs. Wunderbar Films Pvt Ltd [2024 (3) TMI 17 Madras High Court]
- Mohit Minerals Pvt Ltd [2020 (33) GSTL 321 (Guj.)]
FULL TEXT OF THE JUDGMENT/ORDER OF CESTAT CHANDIGARH
The present appeal is directed against the impugned Order-in-Original No. 09/ST/CHD-II/2014 dated 30.01.2014 passed by the Commissioner of Central Excise, Chandigarh-II, whereby the learned Commissioner has confirmed a demand of service tax amounting to ₹24,81,931/- under Section 73(1) of the Finance Act, 1994, along with applicable interest under Section 75 of the Act. A penalty of ₹5000/- under Section 77 and a penalty of ₹24,81,931/- under Section 78 of the Act were also imposed by the learned Commissioner.
2. Briefly stated, the facts of the case are that the Appellant, M/s Punjab Infrastructure Management Co., had been engaged as “management contractor” for operation and maintenance of bus terminals/bus stands at Nawanshahar and Moga by Government of Punjab/its undertaking i.e. M/s PUNBUS to operate and maintain these bus stands on behalf of the Government of Punjab or PUNBUS. The Department entertained the view that the Appellant is liable to pay the service tax under the category of ‘Business Support Service’. Consequently, a Show Cause Notice dated 24.02.2012 was issued to the Appellant invoking the extended period of limitation to propose demand of service tax under the category of ‘Support Services of Business or Commerce’. The Appellant filed its reply to the said Show Cause Notice. After following the due process, the learned Commissioner vide the impugned Order-in-Original dated 30.01.2014, confirmed the demand of service tax along with interest and penalties as noted supra, for the period December 2006 to September 2011. Hence, the present appeal.
3. Heard both sides and perused the material on record.
4. The learned Consultant for the Appellant submits that the impugned order is not sustainable in law as it has been passed without properly appreciating the facts, the law, and the binding judicial precedents.
4.1 He further submits that, in fact, the Appellant was appointed as a management contractor by the Government of Punjab/PUNBUS for the operation and maintenance of bus terminals at Nawanshahar and Moga under a concession arrangement. Since these bus terminals are public utility infrastructures created and regulated by the State Government for the purpose of facilitating public transport and ensuring orderly movement of passengers, the adda-fee collected at such terminals is not a privately negotiated commercial consideration but is a statutory levy fixed by the State Government. The Appellant had no authority to negotiate or determine the rate of adda-fee and merely collected the same in accordance with the Government mandate. He also submits that the agreement governing the relationship exists solely between the Appellant and PUNBUS/State Government, and there is no contractual arrangement between the Appellant and the individual bus operators.
4.2 He further submits that it is a settled law that service tax under the Finance Act, 1994 is a contract-based levy and presupposes the existence of a service provider, a service recipient, and a contractual nexus between them. He further argues that in the absence of any contract or commercial arrangement between the Appellant and the bus operators, the essential ingredients of “Support Services of Business or Commerce” are not satisfied; the Appellant did not provide support to the business of the bus operators, but rather managed public infrastructure under the statutory supervision of the State Government.
4.3 He further submits that the issue involved in the present appeal is no longer res integra and stands settled in favour of the assessee by this Tribunal in the case of Rohan And Rajdeep Infrastructure Pvt. Ltd. vs. CCE & ST, Ludhiana [2026 (2) TMI 236 – CESTAT CHANDIGARH], wherein it has been categorically held by the Tribunal that the collection of adda-fee under a State concession agreement, in the absence of a direct contractual relationship with bus operators, does not constitute “Business Support Service”.
4.4 As regards limitation, the learned Consultant submits that the impugned demand is wholly barred by limitation. He argues that the Appellant got registered with the Service Tax Department on 09.07.2010 and the Department was fully aware of the operations of the Appellant. The Appellant did not file its returns because it was under the bona fide belief that it was not liable to pay any service tax. He further submits that the Department has failed to establish any of the ingredients necessary to invoke the extended period of limitation under Section 73(1) of the Act.
5. On the other hand, the learned Authorized Representative for the Revenue-Respondent reiterates the findings of the impugned order.
6. We have considered the submissions made by both the parties and perused the material on record. We note that the only issue involved in the present appeal is whether the Appellant is liable to pay service tax under the category of “Support Services of Business or Commerce” as alleged by the Department.
6.1 We find that this issue is no longer res integra and has been considered by this Tribunal in detail in the case of Rohan And Rajdeep Infrastructure Pvt. Ltd. (supra), wherein the Tribunal, after considering all the submissions and facts, has held that the collection of adda-fee under a State concession agreement, in the absence of a direct contractual relationship with bus operators, does not constitute “Business Support Service”. The relevant findings of the Tribunal are reproduced herein-under:
“12. Further, we find that it is a settled law that the service tax is a contract based levy; in other words, service tax is levied on a transaction between recipient and provider pursuant to a contract between the parties.
12.1 In this regard, we may refer to the decision of Hon’ble Madras High Court in the case of Commr of CGST, Chennai vs. Wunderbar Films Pvt Ltd [2024 (3) TMI 17 Madras High Court], wherein it has been held as under:
“9.1 However, the learned Judge thereafter proceeded to make certain observations on merits, which causes serious prejudice to the Revenue as it imposes fetters on the power / authority of the Adjudicating authority in carrying out the adjudication pursuant to the order of remand. The question as to whether a particular transaction would attract the levy of Service Tax as constituting a taxable service within the meaning of 65(105)(zzzzt) prior to 01.07.2012 or Section 66B read with Section 658(44) and Section 66E(c) w.e.f. 01.07.2012 ought to be determined on the basis of the contracts entered into between the service provider and the recipient. One cannot generalize the transactions nor determine the liability without examining the contracts individually for the rights/ obligations flowing therefrom may vary from contract to contract. This would be evident by the very fact that some of the contracts have been treated by the respondents in the writ appeals as representing temporary transfers thereby attracting the levy of Service Tax, while other contracts are understood by the respondents as resulting in perpetual transfers ie., permanent and not temporary, thus outside the purview of levy of Service Tax. We are of the view that the observations so made by the learned Judge represent a truncated rather incomplete adjudication, warrant interference.”
12.2 Similarly, the Hon’ble Gujarat High Court in the case of Mohit Minerals Pvt Ltd [2020 (33) GSTL 321 (Guj.)] has held as under:
“201. ……. Hence, it is a tax on consumption and not on business. It is a contract based levy which depends on the contract between the supplier and the recipient. Thus, where the tax is sought to be levied and collected by a person other than the supplier or the supplier of service, distortions and contingency which the Act does not covers, are bound to occur.”
13. Further, we find that it is an admitted fact that the Appellant had a contract with State of Punjab and liability to service tax has to be determined based on the contract with State of Punjab; there exists no contract with the bus operators for providing any services; further, at the time of entering into contract with State of Punjab, the Appellant could not have agreed to provide support services to unknown bus operators; further, the entire bus-terminal constructed by the Appellant could not have been constructed to support the business of the bus operators, in fact, bus-terminals are created as a public utility service and not as support services for bus operators and hence, the service tax is not leviable under the business support services.
14. Further, we find that adda-fees are collected by the Appellant as per the agreement with the PIDB which authorizes the Appellant to collect the adda-fees in lieu of the investment made by the Appellant for developing the bus-terminal. At the most, these adda-fees are in the nature of parking-fees which are exempt under ‘renting of immovable property services’.
15. Further, it is pertinent to note that Schedule-X to agreement is “project site lease deed” by which the Appellant is being granted leasehold rights in the project site i.e. land, on which bus-terminal is required to be developed and in consideration, the Appellant is required to pay lease rental of Rs.50,000/- per month to PIDB for the concession period. The agreement between the Appellant and PIDB proves that the services provided, if at all, are to be PIDB and not to be users of the bus-terminal.”
7. We find that the ratio laid down by the Tribunal in the case Rohan And Rajdeep Infrastructure Pvt Ltd (supra), is squarely applicable to the facts and circumstances of the present case and by following the same, we set aside the impugned order and allow the appeal of the Appellant on merit. Since, we are allowing the appeal on merit, we are not deciding the issue of limitation.
(Order pronounced in the open court on 24.08.2026)
