PNC Infratech Ltd. Vs CCE- Ludhiana (CESTAT Chandigarh)
CESTAT Chandigarh held that collection of toll by the assessee would not be considered as Business Auxiliary Service provided to NHAI as the assessee is not rendering any service which is incidental or auxiliary on behalf of NHAI and the NHAI is not undertaking any business activity.
Facts- The show cause notice dated 23.05.2008 was issued to the appellant who was engaged in providing the services under ‘Business Auxiliary Services’ alleging that they appeared to have contravened the provisions of Section 68, 69 & 70 of the Finance Act, 1994 and Rules, 4, 5, 6 and 7 of Service Tax Rules, 1994 by providing the said taxable services without obtaining registration and without payment of service tax.
It was imputed that they were collecting toll tax at “Doraha Toll Plaza”, Doraha, Distt. Ludhiana on behalf of National Highway Authority of India (NHAI) for a consideration of Rs. 14,25,900/- per month and had received an amount of Rs. 4,27,77,000/- from NHAI during the period 01.07.2003 to 31.01.2006 for their services at “Doraha Toll Plaza”, on which they have failed to pay service tax amounting to Rs. 39,46,036/- under the category of ‘Business Auxiliary Services’.
The adjudicating authority vide order-in-original confirmed the demand of service tax along with interest and penalty. Commissioner (A) upheld the demand. Being aggrieved, the present appeal is filed.
Conclusion- Held that the collection of toll by the assessee would not be considered as Business Auxiliary Service provided to NHAI as the assessee is not rendering any service which is incidental or auxiliary on behalf of NHAI and the NHAI is not undertaking any business activity.
Held that the impugned order is not sustainable in law and hence we set-aside the impugned order by allowing the appeal of the appellant with consequential relief, if any.
FULL TEXT OF THE CESTAT CHANDIGARH ORDER
The present appeal is directed against the impugned order dated 21.04.2011 passed by the Commissioner (Appeals) of Customs & Central Excise, Chandigarh whereby the Ld. Commissioner has confirmed the demand of Service Tax of Rs. 39,46,036/- under proviso to Section 73 (1) of the Finance Act, 1994 and imposed equivalent penalty under Section 76 and 78 of the Finance Act, 1994. Ld. Commissioner also imposed penalty of Rs. 1,000/- under Section 77 of the Finance Act, 1994. Aggrieved by the said order, the appellant is before us.
2. Briefly the facts of the case are that the show cause notice dated 23.05.2008 was issued to the appellant who was engaged in providing the services under „Business Auxiliary Services‟ alleging that they appeared to have contravened the provisions of Section 68, 69 & 70 of the Finance Act, 1994 and Rules, 4, 5, 6 and 7 of Service Tax Rules, 1994 by providing the said taxable services without obtaining registration and without payment of service tax. It was imputed that they were collecting toll tax at “Doraha Toll Plaza”, Doraha, Distt. Ludhiana on behalf of National Highway Authority of India (in short NHAI) for a consideration of Rs. 14,25,900/- per month and had received an amount of Rs. 4,27,77,000/- from NHAI during the period 01.07.2003 to 31.01.2006 for their services at “Doraha Toll Plaza”, on which they have failed to pay service tax amounting to Rs. 39,46,036/- under the category of „Business Auxiliary Services‟. On these allegations, an enquiry was conducted against the appellant and statements of the authorized representative of the appellant were recorded. Thereafter, a show cause notice dated 23.05.2008 was issued alleging that „toll operations‟ undertaken by the appellant amounted to „Business Auxiliary Services‟ („BAS‟) under Section 65(19) of the Finance Act, 1994 („Act‟) and thus the consideration received against „tolling operations‟ was liable to service tax for the period 01.07.2003 to 31.03.2006. The appellant filed the detailed reply to the SCN submitting that the services rendered by the Appellant to NHAI are not liable to service tax under „Business Auxiliary Service‟.
3. After following due process, the adjudicating authority vide order-in-original dated 01.10.2008 confirmed the demand of service tax along with interest and penalty.
4. Aggrieved by the said order, the appellant filed an appeal before the Ld. Commissioner (Appeals) and the Ld. Commissioner (Appeals) upheld the order-in-original vide impugned order dated 02.05.2011. Hence, the present appeal.
5. Heard both the parties and perused the material on record.
6. Counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law and the binding judicial precedents on the same issue. She further submitted that in the present case, the demand has been confirmed on the ground that the tolling operations carried out by the appellant for NHAI are covered by Business Auxiliary Service under clause (iv) of Section 65(19) of the Act and clause (vii) of Section 65(19) of the Act. She further submitted that in the impugned order, it was held that the appellant is rendering services of collection toll/ fee to NHAI for a consideration and the said service is covered under the definition of „Business Auxiliary Service‟ as the same is incidental or auxiliary support service such as billing, billing collection or recovery of cheques, accounts and remittance, evaluation of prospective customer and public relation services and hence subject to service tax. She further submitted that the services rendered by the appellant are not covered by any of the activities specified in this clause. She also submitted that for qualifying under clause (iv) or (vii), the said service is required to be incidental or auxiliary to the services covered in other clauses. She also submitted that by collecting toll from the commuters, appellant was rendering service directly to NHAI and no service was being rendered to commuters on behalf of NHAI and therefore, the services undertaken by the appellant are not covered by BAS and not liable to pay tax. It is her further submission that the services will be covered by the definition of „Business Auxiliary Service’ only if it is auxiliary to a business activity but NHAI is not undertaking any business activity by constructing and maintaining of national highways and collecting toll for the same rather NHAI is merely undertaking a statutory function and the appellant as a contractor, is engaged in collecting statutory levies on behalf of the statutory authority which is not engaged in any business and hence, demand under Business Auxiliary Service is not sustainable. For this submission, she relied upon the following decisions:-
