Order Date – 21 February 2023

Parties: M/s. Sangam India Limited Vs Commisssioner Central Excise 

Facts – 

• The Appellant, M/s. Sangam India Limited, was given the right for collection of toll charges by the National Highway Authority of India (NHAI).
• Relying on the Circular No. 152/3/2012-ST dated February 22, 2012 a show cause notice dated 17.12.2015 was issued to the Appellant alleging that from July 01, 2012 onwards, the services provided by the appellant does not fall under section 66 D(h) of the Act as it covers the services by ways of access to the road or bridge on payment of toll charges. Therefore, service tax was leviable.

Issue –

• Whether the collection of toll /user fee on behalf of NHAI is chargeable to service tax?

Order –

• The Tribunal found the allegation that the appellant worked as a ‘Commission Agent’ on whose behalf he collects the toll, appears to have overlooked the underlying scheme of the tender which brought the appellant into this transaction. The contractual arrangement between the appellant and NHAI was for undertaking the collection of toll or  user fee.   The terms of the contract is very clear: possession of the ‘Kanwaliyas  Toll Plaza’ asset is transferred to the appellant for the stream of lumpsum payment guaranteed by the appellant. Any deficit returns owing to decreased vehicular traffic or any other reason affects the revenue steam  of the appellant.  A ‘Commission Agent’ is  akin to a channel partner in delivery of goods/service, wherein the Principal bears all the risks.
• The tax liability does not arise by way of being Commission Agent as per section 65(19) of the Finance Act, 1994 for the period prior to introduction of negative list regime.
• The issue under consideration is squarely covered by the order of this Tribunal in the case of Souvenir Developers India Pvt. Ltd vs Commissioner of Central Excise, Customs & Service Tax I, held that the Circular No. 152/3/2012-ST dated February 22, 2012, not having considered the degrees of private participation in infrastructure projects, is not a reliable guide to tax liability except in instances that was so intended therein.
• It was also held that in Section 66D of Finance Act, 1994 does not bespeak any such restriction on the provider of service. Therefore, there can be no controversy on the immunity from tax for the period after 1st July, 2012 merely from transfer of responsibility for collection to the appellant.”
• Hence the appeal is allowed.