Date – 05 August 2022

Facts

• The appellant, M/s. Haridwar Roorkee Development Authority, is providing services in relation to “construction of residential complex service, renting of immovable property service” etc.
• The Dept. observed that the appellant has neither taken the registration with the Service tax Department nor the Service tax has been ever paid by the appellant and exemption under clause (4) of Mega Notification No. 25/2012 dated 20.06.2012 is not applicable.
• The Show Cause Notice No. 68/2016 dated 24.04.2018 was served upon the appellants demanding a Service tax of Rs.2,71,09,544/- along with the interest and the appropriate penalty.
• The adjudicating authority demanded Service tax amounting to Rs.2,31,84,581/- for the Financial year 2012-13 to 2014-15 along with interest and the penalty.
• Aggrieved, the appellant filed for an appeal.

Issue 

• Whether the various fees collected by the appellant can be held as consideration for rendering any service by the appellant to someone else?
• Whether income under freehold lease rent, miscellaneous receipt, and Harilok Maintenance is consideration towards providing a service by the appellant?

Order

• The authorities held that no Revenue benefits have been incurred by the appellant from the amounts of several different kind of fees collected by them, the entire amount so received been deposited in the Government Treasury. The authorities placed reliance on Circular No. 89/7/2006-ST dated 18.12.2006 according to which the fee and charges since are collected as per statute, they cannot be termed as consideration.
• The authorities further observed that according to entry no. 25 of Mega Notification No. the fees collected by the Appellant in the form of map fee, development fee, compounding fee, supervision fee, and sub-division fee, is directly related to the regulation of land and urban planning while stacking fee is for disposal of solid waste management. Therefore, the Appellant is entitled to exemption.
• The authorities placed reliance on Karnataka State Industrial Area Dev Board Vs CCE, wherein Hon'ble Tribunal decided "we are of the considered opinion that the appellant is a statutory body discharging the statutory function as per the statute KIAD Act, 1966 and hence are not liable to pay service tax’’
• The authorities accordingly held that the demand of Rs. 2,31,84,581/- as a liability towards various amounts received by the appellant on account of various fees is not sustainable.
• The authorities further relied on the case of Hon’ble Allahabad High Court in the case of Greater Noida Industrial Development Authority wherein the Allahabad High Court held that if the sovereign/public authority provides a service, which is not in the nature of statutory activity and the same is undertaken for a consideration (not statutory fee), then in such 
• cases, service tax would be leviable as long as the activity undertaken falls within the scope of a taxable service and defined in Finance Act, 1994. 
• Hence, it was held that income under heads of ‘Free Hold Lease Rent, Miscellaneous Receipt, and Harilok Maintenance Service’ are the monetary benefits to the appellant, hence liable to Service tax irrespectively of being a statutory body.