Case Law Details
Ahmedabad Municipal Corporation Vs C.S.T. Service Tax (CESTAT Ahmedabad)
In the case of Ahmedabad Municipal Corporation Vs Commissioner of Service Tax (CESTAT Ahmedabad), the tribunal addressed the taxability of Mandap Keeper Services provided by the Ahmedabad Municipal Corporation (AMC) for the periods 2008-2009 to 2012-2013. For services provided before July 1, 2012, the appellant argued against the extended limitation period for tax recovery, emphasizing its role as a statutory body under Article 243W of the Constitution. The CESTAT concurred, finding no intent to suppress facts or evade taxes, and ruled that any liability for this period was limited to the standard limitation period.
For the period post-July 1, 2012, the tribunal examined the applicability of the negative list under Section 66D of the Finance Act, 1994. Services by government or local authorities are generally exempt unless they fall within specific exclusions, such as “support services” provided to business entities. The tribunal held that Mandap Keeper Services do not qualify as “support services” since these are not outsourced administrative or operational functions. Consequently, AMC’s services were found to be non-taxable, as they were covered by the negative list. The tribunal modified the demands, setting aside the extended period claims and tax liability for the post-2012 period.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
These appeals have been filed by Ahemedabad Municipal Corporation. The period covered in the appeal is from 2008-2009 to 2012-2013. Separate demands were raised for the amount collected by the appellant in respect of three different premises for the period.
2. Learned Chartered Accountant appearing for the appellant pointed out that demands have been raised under the head of Mandap Keeper Services for the period prior to 01.07.2012 and later too. For the period prior to 01.07.2012 the Learned Chartered Accountant primarily contested the matter on the issue of limitation, for the period post 01.07.2012, learned Chartered Accountant pointed out that the services provided by them were not taxable as they were covered in negative list. He claimed that the appellant is a government authority carrying out statutory function entrusted to it under the 12th Schedule of Article 243W of the Constitution.
2.1 Learned Chartered Accountant also argued that since the appellant is a local authority under the direct control of Government of Gujarat there cannot be a charge of deliberate suppression of information or intention to evade duty. Learned Authorised Representative relies on the impugned order.
4. We have considered the rival submissions. A perusal of the impugned order shows that there are no finding whatsoever on the issue of limitation. The impugned order merely holds that the appellants have not doubted the taxability for period upto 30.06.2012 however there are no findings with respect to the invocation of extended period of limitation. The appellants have relied on the following decision:
- Municipal Corporation Rajahmundry 2017 (5) GSTL 78 (Tri Hyd.)
- Brihanmumbai Municipal Corporation 2017-TIOL-1846-CESTAT-Mum
- Karad Nagar Parishad 2019 (20) GSTL 288 (Tri. Mumbai)
In the case of Municipal Corporation Rajahmundry 2017 (5) GSTL 78 (Tri-Hyd) following has been observed:
“9.1.With regard to dispute of renting of immovable property service, the learned advocates for the appellants have conceded the tax liability for the normal period. In any case, there cannot be any dispute on taxability on this score when the said activity is not being shown to be covered by any exclusion or exemption from service tax thereof. We therefore hold that this activity will definitely be leviable to service tax but only for the normal period of limitation. However for the periods beyond the period of limitation in all these cases, notwithstanding the protestations of the learned ARs to the contrary, we are of the opinion that appellants being statutory bodies, they cannot be held to have suppressed facts with any intent to evade payment of tax. At the most, there would be some confusion or delay in understanding their liability to discharge service tax on that matter where a particular activity would be liable for service tax but certainly not accusations of suppression or wilful misstatement with intent to evade tax. In arriving at this conclusion, we are fortified by the decision of this Tribunal in Birhanmumbai Municipal Corporation v. CST, Mumbai-I [2017-TIOL-1846-CESTAT-MUM], in which decision one of us was a Member.”
4.1 Similar observations have been made in other decisions as well. From the above decision, it is seen that the appellant is a statutory body and no individual would gain from avoiding or evading tax. In these circumstances, we concur with the aforesaid decision to hold that there cannot be any intention to evade payment of duty and therefore, invocation of extended period of limitation cannot be sustained. The appellants can only be liable for the period within the period of limitation.
4.2 The second issue relates to the liability of tax for the period post 01.07.2012. The clause (a) of Section 66D when it was introduced w.e.f. 01.07.2012 read as follows:
“66D. Negative list of services. — The negative list shall comprise of the following services, namely :—
(a) services by Government or a local authority excluding the following services to the extent they are not covered elsewhere—
(i) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government;
(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
(iii) transport of goods or passengers; or
(iv) support services, other than services covered under clauses (i) to (iii) above, provided to business entities;”
It is seen that negative list of services excludes from the levy of service tax all the services provided by the Government except those listed in the Serial No. (i) to (iv) of Clause (a) of Section 66D. The services provided by the appellant do not fall under the clause (i) to clause (iv) of Section 66D(a). The Commissioner (Appeals) has denied the benefit of negative list to the appellant on the ground that the appellant has failed to establish that service was provided to non-business entities. No documents were produced by the appellant before Commissioner or before the Original Adjudicating Authority in this regard.
5. From the appeal papers, it is seen that the appellant has extracted the definition of support services as follows:
“Section 65B(49) “support services” means infrastructural, operational, administrative, logistic, marketing or nay other support of any kind comprising functions that entities carryout in ordinary course of operations themselves but may obtain as services by the outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis”
The revenue has sought to classify the service in the nature of Mandap Keeper Service under the category of ‘support service’. We do not find any merit in the argument of Revenue that the service in the nature of Mandap Keeper can be classified under the category of ‘support services’. From the definition of ‘support services’, it is clear that only the services which are in the nature of outsourced services i.e. the functions that entities carry out in ordinary course of operations themselves but may obtain as service by the outsourcing from others for any reason whatsoever. The services in the instant case do not qualify as ‘support services’ and therefore, the services provided by the appellant are covered under the negative list. In these circumstances we find that after 01.07.2012 the services provided by the appellant are covered by the negative list. For the period prior to 01.07.2012, the demand is hit by limitation. The impugned orders are modified accordingly.
(Order pronounced in the open court on 28.11.2024)
Author Bio
