Case Law Details
Agriculture Produce Market Committee Vs C.CGST & CEx- Gandhinagar (CESTAT Ahmedabad)
The issue involved in the present case is that whether the appellant, Agriculture Produce Market Committee (APMC for short) is liable to pay service tax on the rent recovered towards renting of shops, godown, office etc. to the commission agents/ traders under the head of Renting of Immovable Property Service.
Proviso to Section 73(1) can be invoked only, where the Service Tax has not been paid or levied or short-paid or short levied, by reason of fraud; or collusion; or wilful misstatement; or suppression of facts; or contravention of any of the provisions of Chapter V of Finance Act, 1994 or rules made thereunder with intent to evade payment of Service Tax by the person chargeable with Service Tax. If any one of the ingredients are present, then the demand for not paid or short paid Service Tax can be made invoking extended period of limitation of 5 years, from the relevant date. Admittedly, the appellants are a Government Organisation; their functions are regulated by the said enactment and the rules. In such situation, it is clear that there will be a rebuttable presumption regarding non-existence of any of these ingredients on the part of the appellant. We have perused the reasons recorded by the lower authorities to sustain the demand for longer period. We are not convinced with the findings as there is no evidence of the appellants’ mala fide act to evade Service Tax liability by resorting to conduct, which will attract any of the serious allegation listed in the proviso to Section 73(1) of the Act.
We also note that the tax entry “renting of immovable property service” itself was subject matter of serious litigation in various judicial forum. In fact, the Hon’ble Delhi High Court in the case of Home Solutions Retail Ltd. v. Union of India – 2011 (21) S.T.R. 109 (Delhi) held that the activity of the rent per se cannot be subjected to Service Tax levy, whereas the activities in relation to renting are liable to Service Tax. The decision of the Delhi High Court led to legislative changes including retrospective amendment of the concerned legal provisions in the Finance Act, 1994. In fact, for nonpayment of Service Tax under this tax entry, special provision was made under Section 80(2) to waive the penalties. Considering these backgrounds and the status of the appellant as a Government Organisation, we find that the ingredients for invoking demand for extended period are not present in the present case. Accordingly, the demands raised shall be restricted to normal period only. On the same reasons, we hold that penalties imposed on the appellants are also liable to be set aside.
Appeals are disposed of in the following terms :-
Please become a member. If you are already a member, login here to access the full content.
