Commissioner of Central Excise Vs Madhya Pradesh Audyogik Kendra Vikas Nigam Limited (CESTAT Delhi)
Summary: The Customs, Excise & Service Tax Appellate Tribunal, New Delhi, considered the Department’s appeal against the adjudication order concerning service tax on amounts received by M/s Madhya Pradesh Audyogik Kendra Vikas Nigam Limited (MPAKVNL), a state government-owned company engaged in development of industrial growth centres and leasing land for industrial establishments. The Department treated the respondent’s leasing activity as taxable renting of immovable property and alleged non-payment of service tax. The respondent had not obtained service tax registration. The dispute covered lease rent received for land, shops and gomtees during the period from 01.06.2007 to 30.03.2014. The total service tax proposed through four show cause notices was Rs. 6,40,23,593/-.
The Principal Commissioner dropped part of the demand but confirmed Rs. 23,92,191/- for specified periods and Rs. 2,89,56,215/- for the subsequent period. The Department appealed against the portion of the demand that had been dropped. The Department argued that the respondent, despite being a governmental authority, earned profits from leasing land for industrial development and therefore could not claim exemption. It also contended that non-disclosure of service-related income amounted to suppression and justified invocation of the extended limitation period, relying upon Nizam Sugar Factory Ltd. vs. Collector of Central Excise and Bharati Cellular Ltd. and Anr. v. Jai Distillers P. Ltd.. The Department also challenged the non-imposition of penalty under Section 78.
