Gujarat State Land Development Corporation Ltd Vs C.CGST & CEx (CESTAT Ahmedabad)
CESTAT Ahmedabad held that service of soil conservation and land reclamation undertaken by public sector undertaking which is provided to Government is exempt from service tax vide notification no. 25/2012.
Facts-
The appellants are public sector undertaking of the state of Gujarat engaged in assisting government of Gujarat in its efforts for soil conservation and land reclamation. The appellants were not registered with service tax department. Based on Intelligence the Directorate General of Goods and Service Tax Intelligence officers visited the appellants premises and conducted certain investigation. After the investigation SCN was issued to the appellant seeking to demand of service tax under the category of Business Auxiliary Service, supply of tangible goods service and rent a cab service.
Conclusion-
As per notification no. 25/2012 exemption is provided to specified services which includes conservancy. The term conservancy includes the activity of soil conservation and land reclamation. Accordingly, services of soil conservation and land reclamation provided by the public sector undertaking formed by the Government is exempt from service tax.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
This appeal has been filed by M/s Gujarat State Land Development Corporation against demand of service tax under the category of business Auxiliary Service. The Revenue is sought to change the cause title from “Service Tax Ahmedabad” to “ Commissioner, Central GST & Central Excise , Gandhinagar Commissionerate, Custom House , Navrangpura, Ahmedabad”. The change in cause title is allowed and cause title is accordingly amended.
2. Learned Counsel for the appellant pointed out that the appellant’s are public sector undertaking of the state of Gujarat engaged in assisting government of Gujarat in its efforts for soil conservation and land reclamation. The appellants were not registered with service tax department. Based on Intelligence the Directorate General of Goods and Service Tax Intelligence officers visited the appellants premises and
conducted certain investigation. After the investigation SCN was issued to the appellant seeking to demand of service tax under the category of Business Auxiliary Service, supply of tangible goods service and rent a cab service.
2.1 Learned Counsel argued that the main purpose of creation of the said public sector undertaking was to assist government in its effort for soil conservation and land reclamation. The activity was funded by government and certain funds were given to the appellant for conducting such activities . 2.2 Learned counsel pointed out that the state government releases the grants every year to carry out such activities for which the appellant do not charge any amount from farmers who are the beneficiaries of the scheme. The appellants have many offices situated at various district and taluka level. The appellants have no independent source of funds. A part of the fund is used for the administration of the appellant from the grants released by the government. The government allocates and releases the grants for establishment charges in the beginning of each financial year from which they incur its establishment expenditure.
2.3 Learned counsel pointed out that the Revenue is seeking to charge service tax under the category of Business auxiliary service, in the category of provision of service on behalf of the client. Learned counsel pointed out that the government of Gujarat is supposed to be the client of the appellant learned counsel pointed out that government of Gujarat is not engaged in any kind of business to qualify for any service under the category of business auxiliary service and therefore there cannot be any service in the nature of business auxiliary service that can be provided to the government .
2.4 Learned counsel further pointed out that they are merely being reimbursed for the salary paid to the employees and the administrative expenditure and the said reimbursement does not amounts to any consideration for purpose of levy of service tax. He further pointed out that 100 % shares of the appellant are owned by the Government. In these facts of the case learned counsel argued that the activity of managing the schemes for soil conservation and land reclamation do not amount to provision of business auxiliary service .
2.5 Learned Counsel further pointed out that demand is also been made under the category of supply of tangible goods service. It has been noticed that the appellant supplied bulldozers on rent to service recipient (other entities) and the said activity liable to be tax under the category of supply of tangible goods service . Learned counsel pointed out that the SCN does not specify as to how the charging of rent for bulldozers amounts to supply of tangible goods service. He further pointed out that there is no discussion whatsoever on the possession and effective control of the bulldozer which is a key element on determining the liability of service tax. He pointed out that even impugned order does not disclose how mere renting of bulldozers amount to supply of tangible goods service.
The next issue raised in the proceeding relates to provision of rent a cab service. Learned counsel pointed out that employees of the organization are provided with official vehicles . However if and when the said official vehicles are used for private purpose then certain amount is charged to the appellant. It was argued that simply charging the employees for private use of official vehicle does not amount to provision of rent a cab service. He further pointed out that the impugned order also does not give any reason as to how this amount collected from the employees for private use of vehicle amounts to the provision of rent a cab service .
2.6 Learned counsel further pointed out that the appellants are Government entity and therefore cannot be any suppression, misdeclaration etc on the part of the appellant with the intention of evasion of duty. He pointed out that extended period of limitation has been invoked wrongly in the instant case.
Serial No. 12 and 25 of the Notification 25/2012 dated 20.06.2012 grants exemption to specified services provided to government, a local authority or a government authority by the way of
a) Carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and up gradation
The said notification however extended benefit to the following with effect from 11.07.2014 :
