office of the principal commissioner of cgst, ahmedabad south

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OFFICE OF THE PRINCIPAL COMMISSIONER OF C. G. S. T.,AHMEDABAD SOUTH

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G. S. T. BHAVAN, AMBAWADI, AHMEDABAD - 380 015

F. No.STC/04-46/GIDC/0&A/2019-20 DIN no. 20201164WS0000818936

3it&r#<rTftW: Date of Order: 13.11.2020 Date of Issue : 13.11.2020

SHT vrfcf/Passed by: Shri MohitAgrawal, ADDITIONAL COMMISSIONER *******************************************************************************

W&r W/Order-In-Original No.24/CGST/Ahmd-South/ADC/MA/2020*******************************************************************************

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This copy is granted free of charge for private use of the person(s) to whom it is sent.

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Any person deeming himself aggrieved by this Order may appeal against this order in Form E.A.I to Commissioner (Appeals), Central GST, Central GST Bhavan, Near Government Polytechnic, Ambawadi, Ahmedabad -15 within sixty days from date of its communication. The appeal should bear a court fee stamp of Rs.2.00/-only. '

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The Appeal should be filed in form No. E.A.-l in duplicate. It should be filed by the appellants in accordance with provisions of Rule 3 of the Central Excise (Appeals) Rules, 2001. It shall be accompanied with the following:

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Copies of the Decision (one of which at least shall be certified copy of the order appealed against) or copy of the said Order bearing a court feestamp of Rs.2.00/-.

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An appeal against this order shall lie before the Commissioner (Appeal) on payment of 7.5% of the duty demanded where duty or duty and penalty are in dispute, or penalty, where penalty alone is in dispute."

tTT^/Reference TT-tt. F.No. VI/l(b)/CTA/Tech-42/SCN/GIDC/18-19 dated 14.10.2019issued to M/s. Gujarat Industrial Development Corporation, Fadia Chambers, 3rd Floor, Ashram Road, Ahmedabad

BRIEF FACTS OF THE CASE

M/s. Gujarat Industrial Development Corporation, Fadia Chambers, 3rd

Floor, Ashram Road, Ahmedabad {hereinafter referred to as the ‘assessee’ for the

sake of brevity) is providing Renting of immovable property Service. The assessee

is holding Service Tax registration number AABCG8033DSD001 and is availing

the facility of Cenvat Credit under CENVAT Credit Rules, 2004.

2. The assessee was earlier registered under the Jurisdiction of the

Commissioner of Service Tax, Ahmedabad. Consequent to the issuance of the

Notification No. 12/2017 Central Excise (NT) to 14/2017 Central Excise (NT) all dated 09.06.2017, appointing the officers of various ranks as Central Excise

officers 8b reallocating the jurisdiction of the Central Excise Officers and Trade

Notice No. 01/2017 dated 16.06.2017 issued by the Chief Commissioner, Central

Excise 8b Service Tax, Ahmedabad Zone, the assessee is now registered under the

Jurisdiction of the Commissioner, Central Goods and Service Tax, Ahmedabad, South.

3. EA 2000 Audit of the assessee was carried out by the officers of the Central

Tax Audit, Ahmedabad and the following objections remained unsettled.

Revenue Para 01 : Short payment of Service Tax for the period F.Y. 2015-16

& 2016-17 on the basis of Reconciliation of Income:

4. During the course of Audit, and on reconciliation of the figures of taxable

income as reflected in their books of accounts, viz, Balance

Sheets/income/ledgers, vis-a-vis taxable value declared in the ST-3 Returns filed

by them, it was observed that the assessee has not discharged Service Tax liability

on some portion of the taxable value of service of renting of immovable property

provided by them during the years detailed below:

2016-172015-16ParticularsS. No.7,22,09,100/-7,03,27,590/-Gross Taxable Value as per P8bL Accour16,96,53,354/-6,37,62,915/-Gross Value as per ST 3225,55,746/-65,64,675/-Differences of Gross Taxable Value33,83,362 /-9,51,877/-Service Tax Payable4

4.1 ‘Service" is defined in clause (44) of Section 65B of the Finance Act, 1994

{hereinafter referred to as the ‘Act"), as any activity carried out by. a person for—i/4ao o oof* the Act_ xi-

defines ‘declared service’ as any activity carried out by a person for anoth^

person for consideration and declared as such under Section 66E of the Act. Renting of immovable property is a declared service, specified in clause (a) of

Section 66E of the Act which reads as follows:

66E. The following shall constitute declared service, namely:

Renting of immovable property;(a)

(b)

4.2 Renting is defined in Section 65B(41) as follows :

(41) “renting” means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable

property and includes letting, leasing, licensing or other similar arrangements in

respect of immovable property;

4.3 Section 67(i) of the Act provides that “in a case where the provision of

service is for a consideration in money, be the gross amount charged by the

service provider for such service provided or to be provided by him”.

5. When the above provisions were read together it was clear that any activity

of renting, when carried out by a person for another, for consideration, would

amount to provision of service, which would be taxable. The activity of renting of

immovable property was not covered under the Negative List specified in Section

66D of the Act and were, therefore taxable services. Further, no exemption had

been provided to the services under the Mega Exemption Notification No 25/2012-

ST dated 20.6.2012, as amended or any other Notification issued under the Act. It, therefore, appeared that by providing the service of renting of immovable

property to business entities, for a consideration, the assessee had provided a

declared service under clause (a) to Section 66(E) of the Act. Accordingly, it appeared that the services provided by the assessee were leviable to service tax

under Section 66B.

6. From a reconciliation of the ST-3 returns filed by the assessee with the

financial records for the period 2015-16 and 2016-17, it appeared that theassessee had provided the taxable service of renting of immovable property; had

shown less gross value of Rs.91,20,421/- in their ST-3 returns as compared to

their financial statements and had, therefore, short paid service tax of

4

Rs. 13,35,239/- on differential gross amount charged by them from their

customers.

7. It appeared that the assessee had contravened the provisions of

Section 67 of the Finance Act, 1994 read with Rule 6(1) of the Service

Tax Rules, 1994 inasmuch as they have failed to correctly self-assess

their Service Tax Liability at the specified rates and in such manner

and within such period as discussed supra;Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax

Rules, 1994 inasmuch as they failed to pay the Service Tax on the gross

amount of Rs.91,20,421/- to the credit of the Central Government, by

the 5 th of the quarter immediately following the calendar quarter, in

which the payments are received, towards the value of taxable services; Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax

Rules, 1994 inasmuch as they failed to submit a correct half-yearly

return incorporating the details of the Service Tax discussed supra, along with a copy of the Challan in form GAR-7, for the quarters

covered in the half-yearly returns.

(a)

(b)

(c)

8. It also appeared that the assessee had not disclosed the full amount of

consideration received by them on renting of immovable property in the ST-3

returns filed by them for 2015-16 and 2016-17 and had therefore, suppressed the

material facts from the department. The assessee had shown an income of Rs

14,25,36,690/- from renting of immovable property in their financial records in

2015-16 and 2016-17 whereas in ST-3 returns filed during the same period, the

income from renting of immovable property was shown as Rs.13,34,16,269/-. In

view thereof, unpaid service tax of Rs. 13,35,239/- on the differential gross value

of Rs.91,20,421/- was liable to be demanded and recovered from the assessee

under the proviso to Section 73(1) of the Finance Act, 1994 alongwith interest under Section 75 of the Act, ibid. It also appeared that by the act of not disclosing

the full amount of consideration received on account of renting of immovable

property, the assessee was liable for penal action under Section 78(1) of the Act,

ibid.

The assessee agreed with the observation of the audit party and voluntarily

paid the tax of Rs. 13,35,239/- vide debit entry no. DI2406180282757 dated

19.06.2018, but refused to pay the interest and penalty.

9.

As per section 75 of the Finance Act, 1994 every person, liable to pay the

tax in accordance with the provisions of section 68 or rules made there under,10.

who fails to credit the tax or any part thereof to the account of the Cental

Government within the period prescribed, shall pay simple interest at rate as

prescribed by the Central Government. Since the assessee had failed to make - payment of service tax in the prescribed time limit framed under the rules and

provisions of the Finance Act, 1994, they were liable to pay interest at appropriate

rate on the unpaid Service Tax for the period 2015-16 and 2016-17.

11. Further, as per Section 78(1) of the Finance Act, 1994, where any service

tax had not been levied or paid, or had been short-levied or short-paid, or

erroneously refunded, by reason of fraud or collusion or wilful mis-statement or

suppression of facts or contravention of any of the provisions of Chapter V of the

Finance Act, 1994 or of the rules made thereunder with the intent to evade

payment of service tax, the person who had been served notice under the proviso

to sub-section (1) of section 73 shall, in addition to the service tax and interest

specified in the notice, be also liable to pay a penalty which shall be equal to

hundred per cent of the amount of such service tax. As the assessee had not paid

the service tax within the prescribed time limit and had suppressed the material facts from the department and had contravened the provisions of Chapter V of the

Finance Act, 1994 and the rules made thereunder with intent to evade payment of

service tax, the assessee would also be liable for penal action under the provisions

of Sections 78(1) of the Act, in addition to the service tax and interest under

Section 75 of the Act.

Revenue Para 06: Non payment of Service Tax on other taxable services:

12. On verification of the financial records of the assessee, it was observed that

the assessee had collected fees/ charges from their customers during the F. Y.2015-16 and 2016-17, reflected under the head Misc. Income in their Financial records, as under:

Fees/ charges 2016-172015-16Sr. No.

Collateral Security Fees 41,36,30624,32,88301

Subletting Fees02 91,59,849 51,41,026

Sub Division Fees 8,67,300 210,96,53903

Adjoining Charges04 15,13,182 95,90,174

Amalgamation fees05 20,383 468,59,684

Total Income 1,39,93,597 8,68,23,729

The reasons cited by the assessee for collecting the above Fees and the

nature of such fees are discussed below:

6

Collateral Security Fees:If any person to whom a plot had been allotted by the assessee wishes to avail a

loan by mortgaging the Plot/Shed allotted to them, then he has to take permission

of the assessee. If the Plot allotted to him is mortgaged to a third Party, then the

assessee collects 1% Fees from the original allottee which is termed as “Collateral Fees”. These charges are collected only if property belonging to original allottee is

offered as collateral by any third party.

(i)

(ii) Subletting Fees:GIDC allots plots on lease hold basis. If any allottee of the corporation wants to

sub-let the property allotted to them, they have to take permission of the

corporation for the same. The Corporation collects prescribed charges from the

allottee as per policy of the corporation for such permission, which is termed as

“Subletting Charges”. These charges are collected only at the time of giving

approval of sub-letting of plot/ shed.”

(iii) Sub Division Fees:If any allottee of GIDC wants to sub divide the plot allotted to them then it has to

apply to the corporation for sub division of the plot. The Corporation collects

prescribed charges from the allottees as per the policy of the corporation for such

division of plot, which is termed as “Sub-Division Fees”. These charges are

collected only at the time of giving approval of sub-division of plot.

(iv) Adjoining Charges:If any allottee of GIDC wants expansion and applies to the corporation for

allotment of plot adjoining to their existing unit, the corporation allots the same

after charging extra premium over and above regular allotment price of the

particular plot as per the policy of GIDC, which is termed as “Adjoining Charges”. These charges are collected only at the time of allotment of adjoining plot.

(v) Amalgamation Fees:If any allottee of GIDC wants to merge the various plots allotted to them into a

single plot then they have to apply to the corporation for amalgamation of their

plots. The corporation collects prescribed charges from the allottee as per the

policy of the corporation for such merger of plots, which is termed as

“Amalgamation fees/ charges”. These charges are collected only at the time of

giving approval of amalgamation of plot.

12.1 From the description provided by the assessee on the nature of fees

allottees/plot holders in lieu of permitting such allottees to use the plots allotted

to them for expansion or furtherance of their respective business. Thus, collateral

security fees were collected in lieu of facilitating the plot holder to avail loans \

against mortgaging of property. Similarly, subletting fees, Sub division fees, r " Adjoining fees and Amalgamation fees were collected for permitting the plot holders to sub-let plots, sub-divide plots, acquire the plots adjoining their own

plots and to merge the plots allotted to them.

12.2 It appears that the ‘Misc Income’ reflected in the Balance Sheet consisting

of collateral security fees, subletting fees, Sub division fees, Adjoining fees and

Amalgamation fees, etc., was actually consideration received by the assessee from

the plot holders, in return for facilitating the expansion of their businesses.

13. Whereas, the definitions of taxable services and classification of service as

provided under section 65 of the Finance Act, 1994 has been done away with

effect from 01.07.2012. The Government, vide Notification No. 19/2012-S.T. dated 05.06.2012, appointed 01.07.2012 as the date with effect from which the

provisions of Section 65B of the Finance Act, 1994, as inserted vide clause (C) of

Section 143 of the Finance Act, 2012, came into force. Under the negative list regime of service tax effective from July 1, 2012, as per the definition of service

under Section 65B (44) of the Finance Act, 1994, every activity for a consideration

by any person for another shall be liable to service tax, unless excluded under the

negative list or is specifically exempted.

o

The activities of the assessee insofar as they facilitate and aid the business

of their clientele, in return for consideration, comes within the ambit of service as

per Section 65B(44) of the Act. The term ‘service’ is defined in clause (44) of

Section 65B of the Finance Act, 1994 as under :

14.

(44) “service” means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include—

(a) an activity which constitutes merely,—

(i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or

(ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of Article 366 of the Constitution, or

(iii) a transaction in money or actionable claim;

(b) a provision of service by an employee to the employer in the course of or in relation to his employment;

8

(c) fees taken in any Court or tribunal established under any law for the time being in force.

15. Thus service means any activity carried out by a person for another for

consideration, and includes a declared service. The concept ‘activity for a

consideration’ involves an element of contractual relationship wherein the person

doing an activity does so at the desire of the person for whom the activity is done

in exchange for a consideration. In this particular instance, collateral security

fees, subletting fees, Sub division fees, Adjoining fees and Amalgamation fees were

collected by the assessee in lieu of permitting or allowing the plot holders to

mortgage, sub-let, sub-divide, acquire adjoining plots and amalgamate plots, for

use in the course or furtherance or expansion of their business. Collateral security

fees were collected by the assessee in lieu of facilitating the plot holders to avail loans against mortgaging of rented property. Similarly, subletting fees, Sub

division fees, Adjoining fees and Amalgamation fees were collected as

consideration for permitting the plot holders to sub-let plots, sub-divide plots, acquire the plots adjoining their own plots and to merge the plots allotted/rented

to them. All the arrangements such as mortgaging, sub-dividing, sub-letting, adjoining and amalgamating, affects the nature of the rented plots and directly

affects occupation, enjoyment or exploitation of an immovable property, in this

case, plots allotted by the assessee to holders. The service provided by the

assessee had also resulted in acquisition of rented plots which had enhanced the

value of the plots and made easy availability of loans to the plot holders as a

result of mortgaging the plots. Thus, all such activities for which the assessee has

charged fees have affected the nature of the plots rented out to such plot holders/allottees by the assessee on lease hold basis. Besides, such plots have

been used by the allottees in the course or furtherance of business or commerce.

16. As per Section 66B of the Finance Act, 1994, there shall be levied a tax at

the rate of fourteen per cent on the value of all services, other than those services

specified in the negative list, provided or agreed to be provided in the taxable

territory by one person to another and collected in such manner as may be

prescribed. Taxable service is defined under section 65B(51) of Finance Act, 1994

as any service on which service tax is leviable under Section 66B.

Section 67(i) of the Act ibid provides that where service tax is chargeable on

any taxable service with reference to its value, then such value, in a case where

the provision of service is for a consideration in money, be the gross amount

charged by the service provider for such service provided or to be provided by

him. As per Explanation (a) to section 67 of the Act “consideration” includes any

amount that is payable for the taxable services provided or to be provided.

17.

18. Thus, it seemed that the various fees such as Collateral Security fee®

Subletting fees, Sub-division fees, Adjoining fees and amalgamation fees, etc., shown under the head ‘Misc Income' in the financial records was consideration. received by the assessee from the plot holders/allottees for services provided by

the assessee to the plot holders, who had undertaken such acts which were in

addition to the purpose for which they were allotted plots in the first place. It, therefore, appeared that by allowing or permitting usage of such plots by the plot holders and thus, enabling and facilitating their businesses, in return for a

consideration, the assessee had provided a service as defined in Section 65B(44) of

the Act, leviable to Service tax in terms of Section 66B of the Finance Act, 1994.

19. Further, Section 66E of the Finance Act, 1944 defines 'declared service' as

any activity carried out by a person for another person for consideration and

declared as such under Section 66E of the Act. Clause (e) of Section 66E of the

Finance Act, 1994 covers under the ambit of ‘Declared Services’, “agreeing to the

obligation to refrain from an act, or to tolerate an act or a situation, or to do an

act”. It is clear that 'agreeing to the obligation to tolerate an act or a situation'for a

consideration, qualifies as a 'service' and therefore, attracts service tax. It also

appeared that the assessee had agreed to the obligation to tolerate an act of the

plot holders, mortgaging / sub-letting / sub-dividing / amalgamating the plots

allotted to them for which the assessee had charged fees as per the terms and

conditions agreed upon by both the parties. On the part of the plot holders, it was

obligated that they shall apply to the Corporation before embarking on such acts

of mortgaging, sub-letting, sub-dividing, amalgamating the plots already allotted

to them by the assessee or before acquiring adjoining plots. In other words, the

assessee had agreed to tolerate the above acts of the plot holders subject to the

plot holders paying the agreed upon consideration. It, therefore, appeared that by

agreeing to tolerate the acts of the plot holders and thus, enabling and facilitating

their businesses, the assessee had also provided a declared service as defined in

Section 66E (e) of the Act, leviable to Service tax in terms of Section 66B of the

Finance Act, 1994.

20. During the period 2015-16 and 2016-17, the assessee had rendered taxable

services for a consideration of Rs. 10,08,17,326/-, but had not paid service tax

amounting to Rs. l,50,52,631/-(Rs. 20,29,072/- + Rs. 1,30,23,559/-).

21. It, therefore, appeared that the assessee had contravened the provisions of

Sections 67, 68, & 70 of the Finance Act, 1994 and Rules 6 and 7 of the Service

Tax Rules, 1994 as under(a) Section 67 of the Finance Act, 1994 read with Rule 6(1) of the Service

Tax Rules, 1994 inasmuch as they had failed to correctly self-assess

10

their Service Tax Liability on the consideration received by them for

provision of taxable services, as discussed supra;(b) Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax

Rules, 1994 inasmuch as they failed to pay the Service Tax to the

credit of the Central Government, by the 5th of the quarter

immediately following the calendar quarter, in which the payments

were received, towards the value of taxable services;(c) Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax




22. It appeared that the assessee had not disclosed the full amount of

consideration received by them on provision of services in the ST-3 returns filedby them for the period 2015-16 and 2016-17 and had therefore, suppressed the

material facts from the department. Hence, it appeared that there was a

deliberate withholding of essential material information from the departmentabout the taxable services provided and consideration received by them, and

such facts came to the notice of the department only during audit. With the

introduction of self-assessment and filing of ST-3 returns online, no documents

were submitted by the assessee to the department and therefore, the department

would come to know about such non-payment of service tax only during audit or

preventive/other checks. Hence, it appeared that all these information had been

concealed from the department deliberately, consciously and purposefully to

evade payment of service tax. Therefore, in this case all essential ingredients exist to invoke the extended period under proviso to Section 73(1) of Finance Act, 1994

to demand the service tax not paid along with interest under Section 75 of the Act ibid.

It appeared that unpaid Service Tax amounting to Rs. 1,50,52,631/-

required to be recovered from the assessee under proviso to Section 73(1) of the

Finance Act, 1994 along with interest under Section 75 of the said Act. It further

appeared that the assessee had suppressed the material fact of rendering such

service from the department with intent to evade payment of service tax. By the

act of not disclosing the full amount of consideration received on account of

provision of service, and by the acts of contravention of the provisions of Sections

67, 68 & 70 of the Finance Act, 1994, the assessee had also rendered themselves

liable for penal action under Section 78(1) of the Act.

23. was

24. Pre-SCN Consultation in terms of instructions issued from File N#

1080/09/DLA/MISC/15 dated 21.12.2015, F.No. 1080/DLA/CC

Conference/2016 dated 13.10.2016 and Master Circular No. 1053/02/2017-CX

dated 10.03.2017, was granted on 21.02.2019, before the Additional Commissioner, Central Tax Audit, Ahmedabad. Subsequent to the Pre-SCN

consultation, the assessee vide letter dated 22/2/2019, informed that they had

undergone service tax audit for the period from 2011-12 to 2014-15 and a show

cause notice was issued to them but the demand under the said show cause

notice was dropped by the Hon. Commissioner, Ahmedabad South and

Ahmedabad Zone Commissionerate has also accepted the same by relying on

Entry No.39 of the Mega Exemption Notification No.25/2012-ST dated

20.06.2012, the relevant extract of which is reproduced below:

“39. Services by a governmental authority by way of any activity in

relation to any function entrusted to a municipality under article 243Wof the

Constitution”

24.1 In view of the above, it was submitted by the assessee that various fees

such as Collateral Security fees, Subletting fees, Sub-division fees, Adjoining fees

and amalgamation fees, etc., collected by the assessee would not attract service

tax.

25. The submissions of the assessee were examined. It was seen that after

conclusion of the audit for the period from 2011-12 to 2014-15, a show cause

notice was issued to the assessee on (i) inadmissible cenvat credit (ii) short

payment of service tax on reconciliation (iii) short payment of service tax on

“infrastructure Up gradation Fund”,(iv) non-payment of service tax on ‘penalty on

non-utilisation’ (v) non-payment of service tax on “water charges” and (vi) nonpayment of service tax on ‘transfer fees’.

25.1 It was seen that the assessee had already accepted their liability and made

payments against inadmissible cenvat credit, against short payment of service tax

on reconciliation and the interest thereon but had refused to pay the penalty. The

Commissioner, Ahmedabad South under his adjudication order had upheld the

imposition of penalty on the assessee for both the above issues. However, in the

matter of short payment of service tax on “Infrastructure Up gradation Fund”, ‘penally on non-utilisation’, ‘transfer fees’, and on Vater charges’, the

Commissioner has dropped the demand w.e.f. 1.7.2012 by relying on Entry No.39

of the Mega Exemption Notification No.25/2012-ST dated 20.06.2012.

12

26. In the present case the assessee had already admitted his liability and paid

the service tax, noticed on reconciliation of financial records vis-a-vis the ST-3

Returns filed by them during the period 2015-16 and 2016-17. The facts of the

present case are distinguishable from the facts of the previous audit and order

passed by the Commissioner, Ahmedabad South. The issue of Collateral Security

fees, Subletting fees, Sub-division fees, Adjoining fees and amalgamation fees, etc., have not been decided in the Order passed by the Commissioner, Ahmedabad South.

27. The contentions of the assessee, therefore, appear to be unacceptable as

Collateral Security fees, Subletting fees, Sub-division fees, Adjoining fees and

amalgamation fees, etc. have a direct correlation with the activity of renting of

immovable property and support and facilitation of the businesses of plot holders

undertaken by the assessee. Hence, there is an implied contractual reciprocity of a

consideration. As long as the payment was made (or fee charged) for getting a

service in return (i.e., as a quid pro quo for the service received), it had to be

regarded as a consideration for that service and taxable irrespective of whatever

name such payment was called. Therefore, it appeared that the assessee had

rendered taxable services as defined under clause (44) of Section 65B of the

Finance Act, 1994, but failed to discharge service tax in the manner prescribed

under Finance Act, 1994. Further, it appeared that service of renting of

immovable property provided to business entities and fees/charges collected in

connection with such immovable property from business entities would not fall under the function of Regulation of land-use and construction of buildings

entrusted to a municipality under article 243W of the Constitution.

28. In the regime of self-assessment, the liability of self-assessment and correct

payment of tax was cast upon the assessee by the law. It is the assessee who has

to ascertain his correct tax liability and discharge it as per the time and manner

prescribed under Service tax law. From the evidences, it appeared that the

assessee has knowingly evaded the payment of service tax. Had audit not been

conducted in due course, the lapse would not have come to the notice of the

department. The deliberate non-payment of tax 8b suppression of value of taxable

services provided is in disregard to the requirements of law and also not in line

with the government’s efforts to create a voluntary tax compliance regime. In the

case of Mahavir Plastics versus CCE Mumbai, 2010 (255) ELT 241, it was held

that if facts are gathered by department in subsequent investigation extended

period can be invoked. In 2009 (23) STT 275, in case of Lalit Enterprises Vs. CST

Chennai, it was held that extended period can be invoked when department

comes to know of service charges received by appellant on verification of his

accounts. It, therefore, appeared that unpaid Service Tax of Rs. 1,63,87,870/-^

was required to be recovered from the assessee under proviso to Section 73(1) of

the Finance Act, 1994 along with interest under Section 75 of the Act ibid. The

assessee was also liable for penal action under Section 78(1) of the Act for

contravention of the provisions of applicable law by not ascertaining the correct assessable income and not making payment of service tax on that income.

29. Therefore, M/s. Gujarat Industrial Development Corporation, Fadia

Chambers, 3rd Floor, Ashram Road, Ahmedabad was issued a show cause notice

dated 27.09.2019 asking them to Show Cause to the Joint/Additional Commissioner of Central GST, Ahmedabad South Commissionerate having his

office at 7th Floor, CGST Bhawan, Near Panjarapole, Ambawadi, Ahmedabad as to

why:-

Short paid service tax of Rs.l3,35,239/-(Rupees thirteen lakhs thirty five

thousand two hundred and thirty nine only) should not be demanded and

them under the proviso to Section 73(1) of the Finance Act, 1994 and the amount of Rs. 13,35,239/- already paid by them should not

adjusted and appropriated against the above demand(Revenue Para No.01);

(i)

recovered from

Unpaid Service tax of Rs. 1,50,52,631/- (Rupees one crore fifty lakhs fifty

thousand six hundred and thirty one only) should not be demanded and

from them under proviso to Section 73(1) of the Finance Act, 1994(Revenue Para No. 06);

(ii)tworecovered

(iii) Interest at the applicable rate should not be charged and recovered from

them under Section 75 of the Finance Act, 1994 on the demand at (i) & (ii) above;

Penalty should not be imposed upon them under Section 78(1) of the

Finance Act, 1994 on the demand at (i) 86 (ii) above.(iv)

Defence reply of the noticee:30. The assessee M/s. Gujarat Industrial Development Corporation vide their

reply dated 25.02.2020 have stated that they are established under the Gujarat

Industrial Development Act, 1962 (hereinafter referred to as the GID Act) by the

State Government of Gujarat for the purpose of securing orderly establishment and organization of industries in industrial areas and industrial estates in the

State of. Gujarat and establishing commercial centres in connection with the

establishment and organization of such industries; that GID Act and Gujarat

Industrial Development Rules, 1963 (hereinafter referred to as the ‘GID Rules’) govern the functioning of the GIDC and have submitted a copy of the GID Act and GID Rules’ that after the establishment of the GIDC, various areas in

14

Gujarat where industries were clustered were declared as GIDC zones and new

industrial zones were also created and plots of land were allotted to willing

industries (hereinafter referred to as “plot holders” or “allottees”) on very

economical terms so that overall industrial development could take place in a

structured and planned manner.

31. The assessee has submitted that Section 13 of the GID Act, prescribes the

various functions to be performed by GIDC which includes promotion and

assistance in the rapid and orderly establishment; that growth and development of Industries in the State of Gujarat, development of land on its own account or

for the State Government for the purpose of facilitating the location of industries

and commercial centres; financial assistance by loans to industries to move their

factories into industrial estates or areas and undertaking schemes for providing

units and commercial establishments with such structures as may be necessary

for their orderly establishment, growth and development; that GIDC also

develops the infrastructure like roads, sustained water supply, drainage etc. within the industrial areas or estates. Further, the maintenance and

upgradation of the existing infrastructure is also a primary responsibility of

GIDC, in view of Section 37(1) of GID Act; that Section 14(a) of GID Act, empowers GIDC to acquire and hold such property, both movable and

immovable as GIDC may deem necessary for the performance of any of its

activities, and to lease , sell exchange or otherwise transfer any property held by

it on such conditions as may be deemed proper by GIDC; that further, Section

14(d) of the Act, empowers GIDC to make available buildings on hire or sale to

industrialists or persons intending to start industrial undertakings or

commercial establishments or both the industrial undertakings and commercial establishments; that GIDC and plot holder have lessor-lessee relationship and

annual rent is collected by GIDC from the plot holders; that lease agreement between GIDC and allottees is for 99 years (long term lease); that various

financial institutions provide finance oh the plots considering the allottees as

deemed owners on account of long-term lease; that the common road, streetlights and other amenities are the property of GIDC and are maintained by

GIDC for the allottees; that every GIDC incurs expenditures to maintain the

common facilities such as road, streetlights, water supply etc. and collects

maintenance charges from plot holders on annual basis depending upon the size

of plot; that the proportionate cost of the plots which are vacant or not given on

lease are borne by the GIDC itself. They have also stated that the levy for the

maintenance charges is collected in next year based on actual expenditure

incurred by the GIDC during the preceding year.

32. The assessee has submitted that at the outset, they deny all the charge^

and allegations made in the notice and also denied that the assessee is liable to

tax, penalty or interest as proposed in the notice; that before showing causes as

required in the impugned notice, it was imperative to submit that all allegations

made therein are baseless, capricious and nondescript. The said assessee has

stated that the notice bears allegations that are liable to be squashed based on

grounds submitted hereinbelow and in the light of the facts mentioned as under:

Miscellaneous Receipts:No Service tax is payable under the income head ^Miscellaneous

Receipts’ under the service category of ‘renting of immovable property

service’.(i) SCN has alleged demand on the income head 'Miscellaneous Receipts’

under the service category of “Renting of Immovable Property” for the

period from April, 2016 to June, 2017 without understanding the

nature of the transaction and as the Department is unaware of the

nature of the transaction as carried out by GIDC as alleged in SCN, the

same needs to be set aside.

Governmental Authority:

Notwithstanding to the arguments as stated in the above paras, GIDC

being a governmental authority w.e.f. 01.07.2012 pursuant to entry 39

of Mega Exemption Notification, service shall not be leviable on the

collection done by GIDC under various income heads.

(ii) CBEC has issued mega exemption notification No.25/2012-ST dated

20.06.2012 and the relevant extract is reproduced below:

“39. Services by a governmental authority by way of any activity in relation to

any function entrusted to a municipality under Article' 243W of the

Constitution. *

As per the said exemption entry, any services provided by government authority in relation to any function entrusted to municipality under Article

243W of the Constitution are exempted from the levy of service tax. The term

‘governmental authority’ is defined under clause2(s) of the mega exemption

notification which was amended vide notification No.2/2014-ST dated

30.01.2014 and for the sake of reference, the definition of ‘governmental

authority’ pre and post amendment is as reproduced below:

16

From 01.07.2012 to 29.01.2014 w.e.f. 30.01.2014(s) “governmental authority” means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under Article 243W of the Constitution;_____________________

(s) ‘governmental authority’ means and authority or a board or any other body;(i) set up by an Act of Parliament or a State Legislature; or(ii) established by Government, with 90% or more participation by wayof equity or control, to carry out

any function entrusted to a municipality under Article 243W of the Constitution;’.

In order to ascertain, whether GIDC can be termed as Governmental Authority, the following essentials are being fulfilled by GIDC:Set up by an Act of Parliament or a State Legislature or established bythe Government:

(i) GIDC has been established by the Legislature of State of Gujarat under

the Act and the GIDC performs its functions in accordance with the

provisions contained in the Act and the said Rules. Section 3 of GID Act reads as follows:

“3. (1) For the purpose of securing and assisting in the rapid and

orderly establishment, and organisation of industries in industrial

areas and industrial estates in the State of Gujarat and for the

purpose of establishing commercial centres in connection with the

establishment and organisation of such industries], there shall be

established by the State Government by notification in the OfficialGazette, a Corporation bv the name of the Guiarat IndustrialDevelopment Corporation.(2) The Corporation shall be a body corporate with perpetual succession and a common seal, and may sue and be sued in its

corporate name, and shall be competent to acquire, hold and

dispose of property, both movable and immovable, and to

contract, and do all things necessary, for the purpose of this Act. “(ii) Further, item 29 of the subjects allotted to Industries and Mines

Department of First Schedule to Gujarat Government Rules of Business, 1990 mentions about GIDC. Moreover, the Gujarat Government Rules of

Business, 1990 is made under article 166 of Constitution of India. Therefore, in the light of the above legal provisions, this essential is

fulfilled by GIDC.

90% or more participation of the Central or State Government, by wayof equity or control;

(iii) Section 4 of GID Act lays down the constitution of GIDC, wherein it-has %

been stated that GIDC shall consist of twelve directors, out of which

three official directors shall be nominated by the State Government, of

whom one shall be financial adviser to GIDC. Further, six directors

would be nominated by the State Government, from amongst persons

appearing to it either to be qualified by reason of experience of, and

capability in, industry or trade or finance or to be suitable to represent

the interest of persons engaged or employed therein. Moreover, subsection (2) of section 4 of GID Act specifies that the State Government shall appoint one of the Directors of GIDC to be Chairman of the

Corporation and may appoint one of the other Directors as Vice-

Chairman.

Section 12(1) of GID Act states that the State Government shall appoint a

Managing Director and a Chief Accounts Officer of GIDC and section 15

of GID Act states that all permissions, orders, decisions, notices and

other documents of the GIDC shall be authenticated by the signature of

the Managing Director of the GIDC. Further, section 16 of GID Act empowers the State Government to notify any area as ‘notified area’ under the provisions of the Act and the provisions of the Gujarat

Municipalities Act, 1963 shall not apply to such ‘notified area’. Moreover, section 17 of GID Act empowers the State Government to issue general or

special directions of policy to the GIDC, as it thinks necessary or

expedient for the purposes of carrying out the purposes of the Act and

the GIDC shall be bound to follow and act upon such directions.

(iv)

(v) Section 23(1) of GID Act states that the GIDC shall make provision for

such reserve and other specially denominated funds and in such manner

and to such extent as the State Government may, from time to time, direct

Further, sub section (3) of section 23 of GID Act states that none of the

funds referred to in sub-section (1) shall be utilised for any purpose other

than that for which it was constituted, without the previous approval of

the State Government.

(vi) Section 25 of GID Act prescribes that the GIDC has to prepare and

submit an annual financial statement (budget) and the programme of

work for the succeeding financial year, to the State Government for

approval. Further, the GIDC shall be competent to make variations in the

programme of work in the course of the year, with the approval of the

State Government. Section 26(2) of GID Act prescribes that the accounts

of the GIDC shall be audited bu an auditor appointed bu the State

18

Government in consultation with the Comptroller and Auditor General of

India.

(vii) Section 27 of GID Act empowers the State Government to conduct

concurrent and special audit of the accounts of the GIDC, by such

persons as it may thinks fit. Further, the State Government may pass

such orders on the reports of the special audit and the GIDC shall be

bound to comply with such order.

(viii) Section 45(1) of GID Act states that the GIDC shall furnish to the State

Government such returns, statistics, reports, accounts and other

information with respect to its conduct of affairs, properties or activities

or in regard to any proposed work or scheme as the State Government may from time to time require. Further, section 45(2) of GID Act requires

the GIDC to furnish an. annual report on its working as soon as may be

after the end of financial year in the form and manner prescribed by the

State Government.

(ix) Moreover, section 46 of GID Act empowers the State Government to

withdraw any particular industrial area, estate or part thereof from the

jurisdiction of the GIDC. If, the State Government is satisfied that in

respect of any particular industrial estate or area, the purpose for which

the GIDC was established has been substantially achieved, so as to

render the continued existence of such industrial; estate or area under

the GIDC unnecessary.

\(x) Section 48 of GID Act empowers the State Government to dissolve the

GIDC, if the State Government is satisfied that the purposes for which

the GIDC was established under the Act, has been substantially

achieved.

I

(xi) The provisions contained in the Act, makes it clear that the State

Government of Gujarat controls the function of the GIDC either directly

or indirectly. Thus, this condition is also satisfied by the GIDC.

To carry out any function entrusted to a municipality under Article243W of the Constitution.

(xii) Article 243W of the Constitution of India reads as follow:

243W. Powers, authority and responsibilities of Municipalities, etc

Subject to the provisions of this Constitution, the Legislature of a

State may, by law, endow -(a) the Municipalities with such powers and authority as may be

necessary to them to function as institutions of self government and such law may contain provisions for the devolution of powers

and responsibilities upon Municipalities, subject to such

conditions as may be specified therein, with respect to(i) the preparation of plans for economic development and social justice:(ii) the performance of functions and the implementation of

schemes as may entrusted to them including those in relation tothe matters listed in the Twelfth Schedule:(b) the Committees with such powers and authority as may be

necessary to enable them to carry out the responsibilities

conferred upon them including those in relation to the matters

listed in the Twelfth Schedule

(underlining supplied)

(xiii) Further, Schedule XII of the Constitution of India, lists out the following

functions to be performed by the municipalities:TWELFTH SCHEDULE (Article 243W)1. Urban planning including town planning.2. Regulation of land-use and construction of buildings.3. Planning for economic and social development.4. Roads and bridges.5. Water supply for domestic, industrial and commercialpurposes.6. Public health, sanitation, conservancy and solid waste

management.7. Fire services.8. Urban forestry, protection of the environment and promotion of

ecological aspects.9. Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded.10.Slum improvement and upgradation.11 .Urban poverty alleviation.12. Provision of urban amenities and facilities such as parks, gardens, playgrounds.13. Promotion of cultural, educational and aesthetic aspects.

20

14. Burials and burial grounds; cremations, cremation

grounds and electric crematoriums.15. Cattle pounds; prevention of cruelty to animals.16. Vital statistics including registration of births and deaths.17. Public amenities including street lighting, parking lots, busstops and public conveniences.18.Regulation of slaughter houses and tanneries,


(xiv) Section 3 of GID Act, as discussed hereinabove, lays down that the GIDC

has been established for securing and assisting in the rapid and orderly

establishment and organisation of industries in industrial areas and

industrial estates in the State of Gujarat. Further, section 13 of GID Act states the functions to be performed by the GIDC which includes

establishment, development and management of industrial estates in the

State of Gujarat. Thus, the GIDC has been established for managing and

developing the industrial areas and estates, in order to increase the

number of industries established in State of Gujarat.

(xv) On conjoint reading of Article 243W of the Constitution of India and

section 3 and 13 of GID Act, makes it clear that the GIDC has to prepare

and execute plans for economic development. Since, the growth in the

number of industries is directly proportional to the economic

development of any State. Moreover, the establishment of the GIDC has

resulted in exponential growth in the number of industries in the State of

Gujarat.

(xvi) Section 14 of GID Act, lists out the general powers entrusted to the

GIDC, which includes provision of amenities and common facilities in

industrial estates, commercial centres and industrial areas and

construction and maintenance of buildings, amenities and common

facilities. The amenities include road, supply of water or electricity, street lighting, drainage, sewerage, conservancy and such other convenience as

the State Government may specify. Further, section 37 of GID Act, empowers the GIDC to lay down, maintain, alter, remove, or repair any

pipes, pipelines, conduits, supply or service lines, posts, or other

appliances or apparatus in, on, under over, along or. across any land in

the industrial area or estate for carrying gas, water electricity or

construction of sewers or drains necessary for carrying off workings and

waste liquids of an industrial process. The aforesaid functions qualify as_,ui:~

health, sanitation conservancy and solid waste management’; and ‘public^

amenities including street lighting, parking lots, bus stops and public

conveniences’.

(xvii) The GIDC is also empowered to make available buildings on hire or sale

to industrialists or persons intending to start industrial undertakings or

commercial establishments. Moreover, the GIDC can also construct

buildings for housing of the employees of such industries or commercial establishments and allot factory sheds or buildings and shops etc. to

suitable persons in the industrial estates or commercial centres

established by the GIDC. The aforesaid functions qualify as ‘regulation of

land use and construction of buildings’.

(xviii) Section 16 of GID Act, empowers the State Government of Gujarat to

notify any area as industrial area and the provisions of Gujarat

Municipalities Act, 1963 shall not be in force, in such industrial area. Thus, in light of the above, we are of the view that the GIDC has been

entrusted to carry out functions of the municipality as contained under

Article 243W of the Constitution of India and Schedule XU of the

Constitution of India.

(xix) Their view is also supported by the decision of the HonTile Apex Court in

the GIDC’s own case, GIDC vs. CIT AIR 1997 SC 3275, wherein the

Hon’ble Apex Court held that the industrial development is enveloped

within the expression “planning, development or improvement of cities, towns and villages or for both” in section 10(20A) of the Income-Tax Act, 1961. The relevant part of the said judgment is reproduced hereinbelow:

“9. The Gujarat Act was enacted “to make special provision for securing

the orderly establishment of industries in industrial areas and industrial estates in the State of Gujarat, and to assist generally in the organisation

thereof and for that purpose to establish an Industrial Development Corporation, and for purposes connected with the matters aforesaid” as

can be discerned from the preamble thereof

10. Section 2(g) of the Act defines “industrial area” as any area declared

to be an industrial area by the State Government by notification in the

Official Gazette which is to be developed and where industries are to be

accommodated. Section 2(n) defines “industrial estate” as any site

selected by the State Government where the Corporation builds factories

and other buildings and makes them available for any industries or class

of industries. Section 13 of the Gujarat Act enumerates the function of the

Corporation and they contain, inter alia, “to promote and assist in the

22

rapid and orderly establishment, growth and development of industries in

the State of Gujarat”.

11. We have no doubt that a proper planning is absolutely necessary forcreation of an industrial area. Inside roads. Sub-roads, buildings,sanitation, parks and other amenities have also to be provided in aplanned industrial area as ver the modem concept of anu industrialcomplex. Even educational institutions may have to be provided in suchcomplex. Therefore, development of industrial area would have its directimpact on the development or improvement of that part of the city or townor village where such area is located. Delinking industrial area from thescope of development of anu area is. thus, without anu practical sense.12. In this context a reference to Maharashtra Industrial Development Act, 1962, which is almost analogous to the Gujarat Act, is of some use. While

examining issues relating to the validity of the Maharashtra Act a Division

Bench of this Court has said in Shri Ramtanu Cooperative Housing Society

Ltd. v. State of Maharashtra [1971] 1 SCR 719.”The functions and powers of the Corporation indicates that the Corporation

is acting as a wing of the State Government in establishing industrial estates and developing industrial areas, acquiring property for those

purposes, constructing building, allotting buildings, factory sheds to

industrialists or industrial undertakings. It is obvious that the Corporation

will receive moneys for disposal of land, buildings and other properties

arid also that the Corporation would receive rents and profits in

appropriate cases. Receipts of these moneys arise not put of any business

or trade but out of sole purpose of establishment, growth and development of industries. The Corporation has to provide amenities and facilities in

industrial estates and industrial areas. Amenities of road, electricity, sewerage and other facilities in industrial estates and industrial areas are

within the programme of work of the Corporation.

13. The scheme of the Gujarat Act, as is seen from a survey of the relevant provisions referred to above, would indicate that the Corporation set up

thereunder is to chalk out plans for development of industrial area and

industrial estate in different places which may locate in cities or towns or

villages. Such schemes would normally involve planning the development

of such areas.

14. The word “development” in Section 10(20A) of the I. T. Act should be

understood in its wide sense. There is no warrant to exclude all development programmes relating to any industry from the purview of the word

“development” in the said Sub-section. There is no indication in the Act that development envisaged therein should confine to non-industrial activities.

Development of a place can be accelerated through varieties of schemes and mestablishment of industries is one of the modes of developing an area.

15. One of the reasons for incorporating a specific provision of exemptionfrom income-tax such as Section 10(20A) is to protect public bodies createdunder law for achieving the purpose of developing urban or rural areas forpublic good. When the object is such, an interpretation which wouldpreserve it should be accepted even if the provision is capable of morethan one interpretation. The principle of interpretation is very much

applicable to fiscal statutes also, (vide State of Tamil Nadu v. M.K. Kandaswami [1976] 1 SCR 38. This Court has reiterated the said principle

in Calcutta Jute Manufacturing Co: 1997 (93) ELT 657 (SC).

16. The position is, therefore, clear that authorities constituted by law for

facilitating all kinds of development of cities, towns and villages for public

purposes shall not be subjected to the liability to pay income-tax. The

Division Bench of the High Court seems to have interpreted the exemption

clause too rigidly and narrowly which resulted in the anomaly of bringing

authorities like appellant Corporation within the tentacles of income-tax

liability while the authorities dealing with housing schemes which provide

houses to private individuals would stand outside the taxing sphere.

17. In the result, we allow these appeals, set aside the judgment under

challenge. The answer to the question will, therefore, be in favour of the

assessee and against the Revenue. ”

(xx) Therefore, GIDC qualifies as a governmental authority and performs

various functions which are entrusted to a municipality under Article

243W of the Constitution and Schedule XII of the Constitution. Thus, in

the light of the above referred decision of the Supreme Court in the

GIDC’s own case, it can be said that any activity performed by the

Querist, in relation to the purpose for which, GIDC has been established,

would qualify for exemption from service tax under entry 39 of. the Mega

Exemption Notification No. 25/2012-ST dated 20.06.2012 and hence

service tax shall not be levied for the period from 01.07.2012 on the

amount of transfer fees collected by GIDC from its allottees.

(xxi) As GIDC is exempted from the levy of service tax, demand as alleged in

the SCN needs to be set aside.

33. The assessee has referred to the judgement of Honorable Bombay High Court in case of CCE Nasik v/s Maharashtra Industrial Development Corporation(2017-TIOL-2629-HC-MUM-ST). Part 12 of the judgement of

24

Honorable Bombay High Court in the case of CCE Nasik vs. M/s. MIDC is produced as under:

"We have already referred to Section 14 of the MID Act which provides that the function

of the MIDC is not only to develop industrial areas but to establish and manage

industrial estates. The role of MIDC is not limited only to establishing industrial estates

and allotting the plots or buildings or factory sheds to industrial undertakings. The

function and obligation of the MIDC is also to manage and maintain the said industrial estates as provided in Section 14. Therefore, it is the statutory obligation of the MIDC to

provide amenities as defined in clause(a) of Section 2 of the MID Act to the industrial estates established by it. Thus, it is the statutory obligation of MIDC to provide and

maintain amenities in its Industrial estates such as roads, water supply, street lighting, drainage etc. Thus, we find that the activities for which the demand was made are

part of the statutory functions of the MIDC under MID Act. As stated earlier, the

demand is in respect of service charges collected from plot holders for providing them

various facilities including maintenance, management and repairs. As provided in the

circular dated 18th December, 2006, for providing amenities to the plot holders, the

service fees or service charges collected by MIDC are obviously in the nature of compulsory levy which is used by MIDC in discharging statutory obligations under

Section 14. We find that even in the Order-in-Original, there is no finding of fact recorded that the service rendered for which service tax was sought to be levied was

not in the nature of statutory obligation.”

34. The assessee has submitted that the Honorable Bombay High Court has

relied upon the Circular No.89/7/2006-ST dated 18th December, 2006(copy

submitted). Point No.2 of the Circular is produced as under:

"2. The issue has been examined. The Board is of the view that the activity

performed by the sovereign/public authorities under the provision of the law are

in the nature of statuary obligations which are to be fulfilled in accordance with

the law. The fee collected by them for performing such activates is in the nature

of compulsory levy as per the provisions of the relevant statute, and it is

deposited into the Government Treasury. Such activity is purely in the public

interest and it is undertaken as mandatory and statutory function. These are not in the nature of service to any particular individual for any consideration. Therefore, such activity performed by a sovereign/public authority under the

provisions of law does not constitute provision of taxable service to a person and,

therefore, no service tax is leviable on such activities. ”

35. The assessee has submitted that in their own case Honorable

Commissioner of Ahmedabad South has relied upon the decision of Bombay

High Court in the case of M.I.D.C. and resultantly had dropped the demand of

GIDC, Ahmedabad for the period prior to 01.07.2012. They have submitted a

copy of the Order-in-Original No.AHM-EXCUS-COM-Ol 1-18-19 dated

LiicxL in uic atuu uiuei , ior ine income oi postt?

negative list i.e. from 01.07.2012, Honorable Commissioner of Ahmedabad £

South has relied upon the entry No.39 of the Mega Exemption Notification

No.25/2012 dated 20.06.2012 by considering GIDC as a Governmental Authority and resultantly has dropped the demand of G.I.D.C., Ahmedabad

w.e.f. 01.07.2012.

HCiVVy OLCXLt/Va

36. The assessee has submitted that in their own case, Honorable

Commissioner of Rajkot has relied upon the entry No.39 of the Mega

Exemption Notification No.25/2012 dated 20.06.2012 by considering GIDC as

a Governmental Authority and resultantly has dropped the demand of

G.I.D.C., Rajkot w.e.f. 01.07.2012 and that in addition, there is no

departmental appeal filed against this order which has been accepted by the

Honorable Chief Commissioner, Central GST and Central Excise, Ahmedabad

Zone. They have submitted a copy of the Order-in-Original No.RAJ-EXCUS-

000-CGM-04-17-18 dated 25.10.2018.

37. The assessee has submitted that in their own case, service tax demand

has been dropped by the Department in the case of GIDC, Gandhinagar and

GIDC, Mehsana and GIDC Head Office by relying upon the entry No.39 of the

Mega Exemption Notification No.25/2012 dated 20.06.2012 by considering

GIDC as a Governmental Authority; that in their own case in GIDC, Mehsana

Region, Commissioner(Appeals), CGST, Ahmedabad has dropped the demand

of ‘Miscellaneous Receipts’ income head and has submitted a copy of the said

order.

38. The assessee has submitted that: (a) no interest is payable u/s. 75 of

the Act, as assessee is not liable to pay service tax as demanded in the

impugned SCN as submitted in the above paras. (b)No Penalty is payable

u/s. 78 of the Act as SCN has raised demand for the period from April, 2015

to March, 2017 by invoking larger period of limitation i.e. beyond normal

period of limitation of 30 months. As per section 78 of the Act, larger period of

limitation can be invoked only in case where there is fraud, collusion, willful misstatement, suppression of facts or contravention of provision of any Excise

law with 'an intent to evade payment of duty'. Only in such circumstances

demand can be raised beyond the normal period of limitation. The onus to

provide that there is 'an intent to evade payment of duty' is upon the

department, (c) There is 'no intent to evade payment of duty as SCN has

invoked larger period of limitation only on the ground that assessee has

suppressed/concealed the value of taxable service with an intent to evade

payment of service tax. Only in unusual circumstances, demands for extended

26

m period are to be invoked, with a very serious allegation of suppression of factsSuch serious allegations ofand intention to evade payment of service tax,

suppression can be invoked only if assessee has deliberately done an actionwith an intention to hide certain facts from the department and department

has confirmed it beyond doubt with aid of corroborative evidence that there

was a deliberate act on part of assessee to evade tax. There is no finding in

impugned SCN which can allege that GIDC has intended to evade payment of

tax. In the absence of any finding of “intend to evade” demand cannot be

sustained. Reliance is placed on the following decisions:Continental Foundation v. CCE [2007 1216) E.L.T. 177 (S.C.)]CCE v. Pioneer Scientific Glass Works [2006 1197) E.L.T. 308

(S.C.)]Pahwa Chemicals Pvt. Ltd. v. CCE [2005 1189) E.L.T. 257 (S.C.)]

Anand Nishikawa Co Ltd. v. CCE [2005 1188) E.L.T. 149]

(i)(ii)

(iii)

(iv)

39. The assessee has submitted that in the present case, GIDC is a body

corporate of the Government of Gujarat for performing statutory functions in

accordance with the provisions of Gujarat Industrial Act, 1962 and one of its

functions is the allotment of vacant land to various persons for industrial

purposes on long term lease basis. Thus, GIDC being a government body

could not have a malafide intention for non-payment of service tax. Reliance is

put on the following judgments:CCE v. Bharat Petroleum Corporation Ltd. (2016) 344 ELT 657 (Tri. -(i)

Hyd.)(ii) Karnataka State Tourism Dev. Corpn. Ltd. v. CST (2011) 21 STR 51 (Tri.-

Bang.)(iii) Maharashtra State Seed Certification Agency v. CC&CE (2016) 37 STR

655 (Tri.-Mumbai)(iv) Gujarat Narmada Valley Fertilizers 86 Chem. Ltd. v. CCE (2016) 37 STR

796 (Tri.-Ahmd.)

40. The said assessee has submitted that in a very recent decision by

Karnataka High Court, the Hon’ble HC in case of CST Bangalore Vs. Motor

World and other vide 2012-TIOL-418-HC-KAR-ST has appropriately dealt

with the issue of penalty and applicability of Section 80, the crux of the

decision is as under:

“The ingredients mentioned in the Section should exist. In respect of

Sections 76, 77 and 78 of the Act, not only the ingredients of those Sections

should exist, but also there should be absence of reasonable cause for the said

Section 78, Section 76 is not attracted. Therefore, no penalty can be imposed for^

the same failure under both the provisions; Even if the ingredients stipulated in

Sections 76 and 78 of the Act are established, if the Assessee shows reasonable

cause for such failure, then the authority has no power to impose penalty in view

of Section 80 of the Act; Even after holding that the ingredients stipulated in

Sections 76 and 78 exist, and there is no reasonable cause shown for failure to

comply with the said provisions, the authority has the discretion regarding the

quantity of the penalty to be imposed.”

41. The assessee has submitted that in case of CCE, Meerut-II v. On Dot

Couriers & Cargo Ltd. (2006) 6 STJ 337 (CESTAT, New Delhi) held that no

penalty shall be imposable on assessee for any failure referred to in the said

provisions if assessee proves that there was reasonable cause for said failure.

42. The assessee has submitted that though reasonable cause has not been

defined, it has been interpreted by various courts. In Municipal Corporation

of Delhi v. Jagannath Ashok Kumar, (1987) AIR 2316 (Supreme Court), Apex Court observed that the reasons given by the Arbitrator are cogent and

based on materials on record. Reason varies in its conclusions according to

the idiosyncrasy of the individual, and the time and circumstance in which he

thinks. In Commissioner of Wealth Tax v. Jagdish Prasad Choudhary, (1996) AIR 58 (Patna), it was held that the context of penalty provision, the

word, 'reasonable cause' would mean a cause which is beyond the control of

the assessee. 'Reasonable cause' obviously means a cause which prevents a

reasonable man of an ordinary prudence acting under normal circumstances, without negligence or inaction or want of bona fide from furnishing the return

in time. In Gujarat Water Supply & Sewerage Board v. Unique Erectors

(Gujarat) Pvt. Ltd. (1989) AIR 973 (Supreme Court), it was held that it is

difficult to give an exact definition of the word, 'reasonable'. Reason varies in

its conclusions according to the idiosyncrasy of the individual and the times

and the circumstances of which the actor, called upon to act reasonably, knows or ought to know. In Ram Krishna Travels Pvt. Ltd. v. CCE, Vadodara, [2007 -TMI - 977 - CESTAT, MUMBAI] it was held that bonafide

belief is a reasonable cause under section 80 and as such, penalty was set

aside following ETA Engineering Ltd. v. CCE [2005 -TMI - 165 - CESTAT, NEW DELHI].

43. The assessee has submitted that according to section 67(2) of the

Finance Act, 1994 where the gross amount charged by a service provider, for

the service provided or to be provided is inclusive of service tax payable, the

value of such taxable service shall be such amount as, with the addition of tax

28

period are to be invoked, with a very serious allegation of suppression of facts

and intention to evade payment of service tax. Such serious allegations of

suppression can be invoked only if assessee has deliberately done an action

with an intention to hide certain facts from the department and department

has confirmed it beyond doubt with aid of corroborative evidence that there

was a deliberate act on part of assessee to evade tax. There is no finding in

impugned SCN which can allege that GIDC has intended to evade payment of

tax. In the absence of any finding of “intend to evade” demand cannot be

sustained. Reliance is placed on the following decisions:(i) Continental Foundation v. CCE [2007 (216) E.L.T. 177 (S.C.)](ii) CCE v. Pioneer Scientific Glass Works [2006 (197) E.L.T. 308

(S.C.)](iii) Pahwa Chemicals Pvt. Ltd. v. CCE [2005 (189) E.L.T. 257 (S.C.)](iv) Anand Nishikawa Co Ltd. v. CCE [2005 (188) E.L.T. 149]

39. The assessee has submitted that in the present case, GIDC is a body

corporate of the Government of Gujarat for performing statutory functions in

accordance with the provisions of Gujarat Industrial Act, 1962 and one of its


purposes on long term lease basis. Thus, GIDC being a government body

could not have a malafide intention for non-payment of service tax. Reliance is

put on the following judgments:CCE v. Bharat Petroleum Corporation Ltd. (2016) 344 ELT 657 (Tri. -(i)

Hyd.)(ii) Karnataka State Tourism Dev. Cqrpn. Ltd. v. CST (2011) 21 STR 51 (Tri.-

Bang.)(iii) Maharashtra State Seed Certification Agency v. CC&CE (2016) 37 STR

655 (Tri.-Mumbai)(iv) Gujarat Narmada Valley Fertilizers & Chem. Ltd. v. CCE (2016) 37 STR

796 (Tri.-Ahmd.)

40. The said assessee has submitted that in a very recent decision by

Karnataka High Court, the HonTile HC in case of CST Bangalore Vs. Motor

World and other vide 2012’TIOL-418-HC-KAR-ST has appropriately dealt

with the issue of penalty and applicability of Section 80, the crux of the

decision is as under:

“The ingredients mentioned in the Section should exist. In respect of

Sections 76, 77 and 78 of the Act, not only the ingredients of those Sections

should exist, but also there should be absence of reasonable cause for the said

Section 78, Section 76 is not attracted. Therefore, no penalty can be imposed for^

the same failure under both the provisions; Even if the ingredients stipulated in

Sections 76 and 78 of the Act are established, if the Assessee shows reasonable

cause for such failure, then the authority has no power to impose penalty in view

of Section 80 of the Act; Even after holding that the ingredients stipulated in

Sections 76 and 78 exist, and there is no reasonable cause shown for failure to

comply with the said provisions, the authority has the discretion regarding the

quantity of the penalty to be imposed. ”

41. The assessee has submitted that in case of CCE, Meenit-II v. On Dot

Couriers & Cargo Ltd. (2006) 6 STJ 337 (CESTAT, New Delhi) held that no

penalty shall be imposable on assessee for any failure referred to in the said

provisions if assessee proves that there was reasonable cause for said failure.



of Delhi v. Jagannath Ashok Kumar, (1987) AIR 2316 (Supreme Court), Apex Court observed that the reasons given by the Arbitrator are cogent and

based on materials on record. Reason varies in its conclusions according to

the idiosyncrasy of the individual, and the time and circumstance in which he



the assessee. 'Reasonable cause' obviously means a cause which prevents a




difficult to give an exact definition of the word, 'reasonable'. Reason varies in

its conclusions according to the idiosyncrasy of the individual and the times

and the circumstances of which the actor, called upon to act reasonably, knows or ought to know. In Ram Krishna Travels Pvt. Ltd. v. CCE, Vadodara, [2007 -TMI - 977 - CESTAT, MUMBAI) it was held that bonafide

belief is a reasonable cause under section 80 and as such, penalty was set

aside following ETA Engineering Ltd. v. CCE [2005 -TMI - 165 - CESTAT, NEW DELHI],

43. The assessee has submitted that according to section 67(2) of the

Finance Act, 1994 where the gross amount charged by a service provider, for

the service provided or to be provided is inclusive of service tax payable, the

value of such taxable service shall be such amount as, with the addition of tax

28

payable, is equal to gross amount charged. The assessee has concluded his

submission by stating that as extended period cannot be invoked in their

case, penalty under Section 78 also cannot be levied and hence, penalty

needs to be set aside. In conclusion, the said assessee has requested the

adjudicating authority to drop the proceedings sought to be initiated by the

Show Cause Notice No.F.No.VI/l(b)/CTA/Tech-42/SCN/GISC/2018-19 dated

27.09.2019 and has requested to pass such other orders as may be deemed

fit and proper in the facts and the circumstances of the case.

Record of personal hearing:44. The assessee M/s. Gujarat Industrial Development Corporation was

called for the personal hearing on 20.05.2020. The assessee vide letter dated

16.05.2020 informed that their offices were closed due to complete lockdown

situation in the country due to pandemic COVID-19 since the last one and

half months due to which they do not have access to the required documents

for appearing for the hearing. They requested for a date of personal hearing to

be fixed for appearing in person before the adjudicating authority after the

lock down was over. Thereafter, personal hearings were also fixed on dates

10.09.2020 and thereafter on 18.09.2020 which was attended neither by the

assessee nor by their representative. Thereafter, the next date of personal

hearing which was fixed for 30.09.2020(through video conferencing) was

attended by the representative of the assessee Shri Rashmin Vaja, C.A. wherein he reiterated their submission dated 25.02.2020.

Discussion and findings:

45. I have carefully gone through the case records, the contents of the show

cause notice issued to the assessee, the submission of the assessee as well as the

arguments/discussions made by their representative during the course of

personal hearing. I find that the Show Cause notice has been issued to the

assessee for (i) Short payment of Service Tax for the period F.Y. 2015-16 86 2016-

17 on the basis of Reconciliation of Income amounting to Rs. 13,35,239/- (ii) Non-payment of Service tax on various taxable services provided on which

fees/charges such as Collateral Security Fees, Subletting Fees, Sub Division

Fees, Adjoining Charges and Amalgamation fees were collected. I shall be

discussing both these issues one by one. But, before delving into this aspect, I find it necessary to go into the submission of the assessee i.e. especially that

portion of the submission wherein he has stated that GIDC being a governmental authority w.e.f. 01.07.2012 pursuant to entry 39 of Mega Exemption Notification, service tax shall not be leviable on the collection done by GIDC under various

income heads. As per Entry No. 39 of the mega exemption notification no. 25/2012-ST dated 20.06.2012 issued by the CBEC, the services by a

entmsiieu lo a. mumuipaixL^ uimcx

from payment of Service Tax. considerable portion of his submission to the aspect of his being a Governmental Authority by virtue of which, they are exempt from payment of any Service tax. Therefore, before proceeding further, I find it imperative to go into the details of

the said notification to find out whether Entry No.39 of the said notification is

indeed applicable to the assessee or otherwise.

iTi LIA^JA^ W \Ji.

I also find that the assessee has devoted ^

45.1 While referring to the said exemption entry, I find that any services

provided by governmental authority in relation to any function entrusted to

municipality under Article 243W of the Constitution are exempted from the

levy of service tax. The term ‘governmental authority’ is defined under clause

2(s) of the mega exemption notification which was amended vide notification

no. 2/2014-ST dated 30.01.2014. For the sake of reference, the definition of

‘governmental authority’ pre and post amendment is reproduced below:

w.e.f. 30.01.2014From 01.07.2012 to29.01.2014

authority”“governmental authority” means a board, or an authority or any other body established with 90% or more participation by way of equityGovernment and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W of the Constitution;

‘(s) “governmental means an authority or a board or any other body;

set up by an Act ofState

(s)

(i)Parliament Legislature; or

established

aorcontrol byor

by(ii)Government,with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution;’.______

On going through the aforementioned provisions, it appears that an authority

or a board or any other body can be covered under the definition of

‘Governmental Authority’, if and only if, all the following 3 conditions are

necessarily satisfied:

(i) It should be set up by an Act of Parliament or a State LegislatureOR established by Government

(ii) It should be established by way of 90% of more participation byway of equity or control by Government.

(iii) It should be established for the purpose of carrying out anyfunction entrusted to a municipality under Article 243W of the

Constitution.

30

045.2 In this regard, as per the submission of the assessee, GIDC has been

established by the Legislature of State of Gujarat under the Act and the GIDC

performs its functions in accordance with the provisions contained in the Act and the said Rules. Section 3 of GID Act specifically states that it has been

established for the purpose of securing and assisting in the rapid and orderly

establishment, and organisation of industries in industrial areas and industrial

estates in the State of Gujarat and for the purpose of establishing commercial

centres in connection with the establishment and organisation of such

industries. I find that the Gujarat Industrial Development Corporation(GIDC)

has indeed been established by the Legislature of the State of Gujarat under

the Act as stated by the assessee and therefore the first condition is satisfied.

45.3As regards the second condition, the assessee has referred to and

described in detail the various Sections of the GID Act i.e. Sections- 4, 12(1), 23(1), 25, 27, 45, 46 and 48 and stated that the provisions contained

in the Act makes it clear that the State Government of Gujarat controls the

function of GIDC either directly or indirectly and therefore this condition is

satisfied. However, just because the State Government of Gujarat controls

the function of GIDC either directly or indirectly through the various

sections of the GID Act, it does not necessarily mean that the State

Government has participation of 90% or more by way of equity or control. In this regard, I would like to refer to the Audit Report and Annual Accounts

of Gujarat Industrial Development Corporation for the financial year 2013-

14(available online), wherein it is specifically mentioned at Point No.4(Related Party Disclosure) that “Gujarat Industrial Development Corporation

is a wholly owned corporation of Government of Gujarat Hence it is a state

controlled enterprise as defined in ‘Para-9’ of Accounting Standard AS 18 “Related

Party Disclosure” issued by the Institute of Chartered Accountants of India. Thus no

disclosure is required, keeping the spirit of the accounting standard in mind.” In

view of the above, it can be seen that GIDC is a wholly owned corporation of

the Government of Gujarat and hence the criteria that it should be

established by way of 90% of more participation by way of equity or control

by Government has been fulfilled and hence, I find that the second

condition has also been satisfied.

45.4 As regards the third condition, in order to find out whether GIDC

carries out any function entrusted to a municipality under Article 243W of

the Constitution of India, I find it necessary to go through the list of

a municipality under Article 243W of thefunctions entrusted to

Constitution which is as under:

Schedule XII of the Constitution of India, lists out the following functions to be

performed by the municipalities:

TWELFTH SCHEDULE (Article 243W)1. Urban planning including town planning.2. Regulation of land-use and construction of buildings.3. Planning for economic and social development.4. Roads and bridges.5. Water supply for domestic, industrial and commercialpurposes.6. Public health, sanitation, conservancy and solid waste

management.7. Fire services.8. Urban forestry, protection of the environment and promotion of

ecological aspects.9. Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded.10.Slum improvement and upgradation.11. Urban poverty alleviation.12. Provision of urban amenities and facilities such as parks, gardens, playgrounds.13. Promotion of cultural, educational and aesthetic aspects.14. Burials and burial grounds; cremations, cremationgrounds and electric crematoriums.15. Cattle pounds; prevention of cruelty to animals.16. Vital statistics including registration of births and deaths.17. Public amenities including street lighting, parking lots, busstops and public conveniences.IS.Regulation of slaughter houses and tanneries.


45.5 I find that the assessee has submitted that GIDC is also empowered

to make available buildings on hire or sale to industrialists or persons

intending to start industrial undertakings or commercial establishments. Moreover, the GIDC can also construct buildings for housing of the

employees of such industries or commercial establishments and allot factory sheds or buildings and shops etc. to suitable persons in the

industrial estates or commercial centres established by the GIDC. The

32

’* State Government may specify and that section 37 of GID Act, empowers the

GIDC to lay down, maintain, alter, remove, or repair any pipes, pipelines, conduits, supply or service lines, posts, or other appliances or apparatus in, on, under over, along or across any land in the industrial area or estate for

carrying gas, water electricity or construction of sewers or drains necessary for

carrying off workings and waste liquids of an industrial process. The assessee

has stated that the aforesaid functions qualify as 'water supply for

domestic, industrial and commercial purposes*; 'public health, sanitation

conservancy and solid waste management’; and 'public amenities

including street lighting, parking lots, bus stops and public conveniences’.

45.10 I have gone through the functions entrusted to the municipalites

such as : (i) Water supply for domestic, industrial and commercial purposes, (ii) Sanitation, conservancy and solid waste management and (iii) Public amenities including street lighting, parking lots, bus stops and

public conveniences. I find that, since the assessee has made a reference to

Section 37 of the GID Act, 1962, I need to refer to the said Section which

reads as under:

37(1 )(a) For the purpose of-(i) Carrying gas, water or electricity within any area taken up for development

under paragraph(b) of clause(ii) of Sectionfhereinafter referred to as ‘the said

area’] or(ii) Constructing any sewers or drains necessary for carrying off workings and

waste liquids of an industrial process through the said area.The Corporation may, after giving reasonable notice to the owner or occupier of any

building or land in the said area, lay down, place, maintain, alter, remove, or repair

any pipes, pipelines, conduits, supply or servicelines, posts or other appliances or

apparatus in, on, under, over, along or across any land in the said area.(b) For the purpose of-

(i) Carrying gas, water or electncity from a source of supply to an industrial estate, commercial centre or industrial area, such source of supply being in an

area outside such estate, centre or area (hereinafter referred to as ‘an outside

area’)or(ii) Constructing any sewers or drains necessary for carrying off workings and

waste liquids of an industrial process through the said area.Any person empowered in this behalf by the State Government by Notification in the

Official Gazette (hereinafter referred to as ‘the authorised person>) may after giving

reasonable notice to the owner or occupier of any building or land in the outside

area, lay down, place, maintain, alter, remove or repair any pipes, pipelines, conduits, supply or service lines, posts or other appliances in, on, under, over, along

or across any land in the outside area.)

(2) The Corporation or as the case may be, the authorised person may at any time ^

enter upon any land in any such area and in such event the provisions of Section 38

shall mutatis mutandis apply.(3) While exercising the power conferred by sub-section(l), the Corporation or the

authorized person shall-(i) where the land affected is a street, bridge, sewer, drain or tunnel, comply mutatis

mutandis with the relevant provisions of the Gas Companies Act, 1863, * notwithstanding the fact that the Act is not in force in the area or that the State

government has not issued a notification extending such provisions to such land.(ii) cause as little damage as possible to property.Compensation to all persons -—(4) Nothing herein shall authorise or empower the Corporation or the authorized

person to lay down or place any pipe or other works into, through or against any

building or in any land not dedicated to public use without the consent of the owners

and occupiers thereof, except that the Corporation or such person may at any time

enter upon and lay or place any new pipe in place of an existing pipe in any land

wherein any pipe has been already lawfully laid down or placed in pursuance of

this Act and may repair or alter any pipe so laid down. ”Provided —On going through the aforementioned provisions of Section 37 as well as

Section 14 of the GID Act, 1962, I find that GIDC is involved in providing

functions related to {i) Water supply for domestic, industrial and commercial purposes,(ii) Sanitation, conservancy and solid waste management. - However, on going through the aforementioned sections as well as the other

sections of the GID Act, I do not find any provision which indicates that

GIDC carries out any function related to ‘Public amenities including street lighting, parking lots, bus stops and public conveniences>. Hence, in view of

the facts mentioned above, I find and conclude that the activities of

assessee as mentioned in the above Section is related to the function

mentioned at Entries No. 5 and 6 of the list of functions entrusted to the

municipality under Article 243W of the Constitution of India. Hence, I find

that the assessee has satisfied the third condition also and is covered under

the definition of ‘Governmental Authority’ as defined under clause-2(s) of

Notification No.25/2012-ST dated 20.06.2012 as amended from time to

time.

45.11 I also find that the assessee has referred to a decision of the Hon’ble

Apex Court in the GIDC’s own case, GIDC vs. CIT AIR 1997 SC 3275 to

support their above contention. I have gone through the aforementioned

decision which pertains to Income tax and taxability of GIDC with regard to

Income Tax and is hence not applicable to the present case.

36

46. Having discussed the aspect of applicability of the definition of

‘Governmental Authority’ to the assessee, the issues on which the demand has

been issued to the assessee needs to be examined. I find that the first issue is

regarding short payment of service tax noticed on the basis of reconciliation of

income for the financial years 2015-16 and 2016-17 raised vide Revenue Para-

No:01 of FAR No:2254/2017-18 dated 23.07.2018 issued in respect of M/s. Gujarat Industrial Development Corporation, Ahmedabad. The same is as under:

fil Short payment of Service Tax for the period F.Y. 2015-16 & 2016-17 onthe basis of Reconciliation of Income amoiinting to Rs. 13.35.239/-.During the course of Audit, on reconciliation of the figures of taxable income as

reflected in their books of accounts, viz, Balance Sheets/income/ledgers, vis-a-vis

taxable value declared in the ST-3 Returns filed by them, it was observed that the

assessee had not discharged Service Tax liability on some portion of the taxable

value of service of renting of immovable property provided by them during the

years detailed below:

2015-16S. No. Particulars 2016-177,22,09,100/-Gross Taxable Value as per P&L AccbUr 7,03,27,590/-16,96,53,354/-6,37,62,915/-Gross Value as per ST 32

25,55,746/-65,64,675/-Differences of Gross Taxable Value33,83,362 /-9,51,877/-Service Tax Payable4

While going through the definition of service, I find that, ‘service’ is defined

in clause (44) of Section 65B of the Finance Act, 1994 as any activity carried out

by a person for another for consideration, and includes a declared service. Section

65B(44) of the Finance Act, 1994 reads as under:

47.

SECTION [65B.Interpretations.—In this Chapter, unless the context otherwise requires,—

(44) “service” means any activity carried out by a person for another for consideration, and

includes a declared service, but shall not include—(a) an activity which constitutes merely,—(i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner;

or(ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the

meaning of clause (29A) of article 366 of the Constitution; or

(Hi) a transaction in money or actionable claim;

employee to the employer in the course of or in relation-to his(b) a provision of sendee by an

employment;(c) fees taken in any Court or tribunal established under any law for the time being in force. Explanation 1 . — For the removal of doubts, it is hereby declared that nothing contained in

this clause shall apply to,—(A) the functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities who

receive any consideration in performing the functions of that office as such member; or(B) the duties performed by any person who holds any post in pursuance of the provisions of the

. Constitution in that capacity; or(C) the duties performed by any person as a Chairperson or a Member or a Director in a body

established by the Central Government or State Governments or local authority and who is not deemed as an employee before the commencement of this section.‘Explanation 2. - For the purposes of this clause, the expression “transaction in money or

actionable claim” shall not include—(i) any actimty relating to use of money or its conversion by cash or by any other mode, from one

form, currency or denomination, to another form, currency or denomination for which a separate

consideration is charged;(ii) any activity carried out, for a consideration, in relation to, or for facilitation of, a transaction in

money or actionable claim, including the activity carried out—(a) by a lottery distributor or selling agent on behalf of the State Government, in relation to

promotion, marketing, organising, selling of lottery or facilitating in organising lottery of any kind, in any other manner, in accordance with the provisions of the Lotteries (Regulation) Act, 1998;. (Finance Act 2016)(b) by a foreman of chit fund for conducting or organising a chit in any manner.;Explanation 3. — For the purposes of this Chapter,—(a) an unincorporated association or a body of persons, as the case may be, and a member

thereof shall be treated as distinct persons;

(b) an establishment of a person in the taxable territory and any of his other establishment in a

non-taxable territory shall be treated as establishments of distinct persons.Explanation 4. — A person carrying on a business through a branch or agency or

representational office in any territory shall be treated as hamng an establishment in that territory;

47. lOn comparing the above provisions of Section 65B(44) to the issue in

hand, and while discussing the issue of taxability on the aforementioned services

of ‘renting of immovable property’ provided by the assessee, I find that it does

not get covered under the excluded activities mentioned in clause 65B(44)(a) to

(c) or the excluded functions mentioned in Explanation-1 (A) to (C) of the said

section. Further, in view of the above provisions, any activity which has been

carried out by a person for another for consideration is a ‘service’. In the instant

case, it is an undisputed fact that the assessee are carrying out various activities

for the persons who desire to establish an industry. Further, it is nobody’s case

that the assessee does not receive any consideration towards such activities. Thus, the assessee is carrying out an activity for another for a consideration and

such activity is squarely covered under the four corners of Section 65B(44) of the

38

• 'Finance Act, 1994. Further, the assessee has also not disputed the fact that

they are providing services to their customers. I, therefore conclude that the

services provided by the assessee (as detailed above) is a taxable service covered

under Section 65B(44) of the Finance Act, 1994 w.e.f. 01.07.2012 under which

tax is leviable under Section 66B of the Finance Act, 1994. Section 66B of the

Finance Act, 1994 read as under:

SECTION 66B. Charge of service tax on and after Finance Act, 2012.—

There shall be levied a tax (hereinafter referred to as the service tax) at the rate of fourteen

percenton the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in

such manner as may be prescribed.

47.2 As per Section 66B of the Finance Act, 1994, there shall be levied a tax at

the rate of fourteen per cent on the value of all services, other than those services

specified in the negative list, provided or agreed to be provided in the taxable

territory by one person to another and collected in such manner as may be

prescribed. Further, Section 66E of the Act defines ‘declared service’ as any

activity carried out by a person for another person for consideration and declared

as such under Section 66E of the Act. Renting of immovable property is a

declared service, specified in clause (a) of Section 66E of the Act which reads as

follows:Explanation.—For the purposes of this clause,—

66B. The following shall constitute declared service, namely:(a) Renting of immovable property;(b)(c)

47.3 Renting is defined in Section 65B(41) as follows :

“(41) “renting” means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes

letting, leasing, licensing or other similar arrangements in respect of immovable

property;”

47.4 I find that when the above provisions are read together it is clear that

any activity of renting, when carried out by a person for another, for

consideration, would amount to provision of service, which would be taxable. However, in order to ensure that the activity of renting of immovable property is

not covered under the Negative List specified in Section 66D of the Finance Act,

1994, I find it imperative to refer to Section 66D of the Finance Act, 1994

which reads as under:SECTION 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;(Hi) transport of goods or passengers; or(iv) Any sendee, other than sendees covered under clauses (i) to (Hi) above, provided to

obusiness entities;(b) sendees by the Reserve Bank of India;(c) sendees by a foreign diplomatic mission located in India;(d) services relating to agriculture or agricultural produce by way of—(i) agricultural operations directly related to production of any agricultural produce

including cultivation, harvesting, threshing, plant protection or [ ** *] testing;(ii) supply of farm labour;(Hi) processes carried out at an agricultural farm including tending, pruning, cutting,harvesting, drying, cleaning, trimming, sun drying, fumigating, curing,

sorting,grading, cooling or bulk packaging and such like operations which do not alter the

essential characteristics of agricultural produce but make it only marketable for the

primary market;(iv) renting or leasing of agro machinery or vacant land with or without a structure

incidental to its use;(v) loading, unloading, packing, storage or warehousing of agricultural produce;(vi) agricultural extension services;(vii) sendees by any Agricultural Produce Marketing Committee or Board or services

provided by a commission agent for sale or purchase of agricultural produce;(e) trading of goods;

(f) [****]■;(g) selling of space for advertisements in print media;(h) service by way of access to a road or a bridge on pay ment of toll charges;(i) betting, gambling or lottery;

Explanation. - For the purposes of this clause, the expression “betting, gambling or

lottery” shall not include the activity specified in Explanation2 to clause (44) of section

65B;

(j) l 1* * * *

(k) transmission or distribution of electricity by an electricity transmission or distribution

utility;

d)l * * * * /

(m) sendees by way of renting of residential dwelling for use as residence;

40

L

(n) sendees by way of—(i) extending deposits, loans or advances in so far as the consideration is represented by

way of interest or discount;(ii) inter se sale or purchase of foreign currency amongst banks or authorized dealers of

foreign exchange or amongst banks and such dealers;(o) service of transportation of passengers, with or without accompanied belongings, by—

* * * *(i)[ ](ii) railways in a class other than—(A) first class; or(B) an air-conditioned coach;(Hi) metro, monorail or tramway,(iv) inland waterways;(v) public transport, other than predominantly for tourism purpose, in a vessel between

places located in India; and(in) metered cabs or auto rickshaws(p) services by way of transportation of goods—(i) by road except the services of—(A) a goods transportation agency;or(B) a courier agency;(H) 1***1(Hi) by inland waterways;(q) funeral, burial, crematorium or mortuary services including transportation of the

deceased.

47.5 I have carefully gone through the entire list of services falling under the

negative list under Section 66D and find that the services provided by theassessee do not fall under negative list of services under Section 66D of the

In view of the above, it can be clearly concluded that theFinance Act, 1994.services provided by the assessee are correctly covered as taxable services under

Section 65B(44) of the Finance Act, 1944 as well as a ‘declared service’ underSection 66E(a) of the said Act as any service on which service tax is leviable

under Section 66B of the said Act. Also, on going through the list of functions

entrusted to a municipality under Article 243W of the Constitution of India, and

comparing the same to the issue in hand, I find that the service of ‘renting of

immovable property’ rendered by the assessee are not related to any of the

functions entrusted to a municipality under Article 243W of the Constitution of

India and hence no exemption is available to the assessee as per Sr.No.39 of

Mega Exemption Notification No 25/2012-ST dated 20.6.2012. I, therefore, find

that by providing the service' of renting of immovable property to business

entities, for a consideration, the assessee has provided a declared service under

clause (a) to Section 66(E) of the Finance Act, 1994 which are leviable to service

tax under Section 66B of the said Act.

m47.6. It was found only during the reconciliation of the ST-3 returns filed by the

assessee with the financial records for the period 2015-16 and 2016-17, that the

had provided the taxable service of renting of immovable property, had

shown less gross value of Rs.91,20,421/- in their ST-3 returns as compared to

their financial statements and had, therefore, short paid service tax of

Rs. 13,35,239/- on differential gross amount charged by them from their

customers.

assessee

47.7 The assessee have claimed exemption under Sr. No. 39 of Notn. No. 25/2012-ST. The assessee qualifies as a ‘Governmental Authority’ in view of the above discussion. However, the exemption is available only to the services provided in relation to to any function entrusted to a municipality under article 243 W of the Constitution. The relevant text of the notification is reproduced under for ease of reference:

Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution.

The above clause implies that a twofold condition is required to be fulfilled viz. 1) the services should be provided by a Governmental Authority and 2) Services should be in relation to any function entrusted to a municipality under article 243W of the Constitution. In the instant case, the services have been provided by a Governmental Authority but for the purpose of ascertaining the benefit of exemption it is of utmost importance that the services should have been provided in relation to any function entrusted to a municipality under article 243 W of the Constitution. The assessee have harped on functions mentioned at Sr. No. 2, 3, 5, 6 and 17 of Article 243W of the Constitution. The scope of the said activities vis-a-vis the activity under examination is discussed hereunder:

Sr No ofArticle243W

Nature of function Scope of such function vis-a-vis the actual service provided

Regulation of land-use and construction of buildings

2 The actual activity is renting of immovable property. Thus, the aspect of construction of buildings is ruled out. As regards the function of regulation of land-use is concerned the same would be merely restricted to the act of regulation. The actual act of renting out the property would not be covered under the regulation activity.

3 Planning for economic andsocial development

The language employed clearly indicates that the scope of the function is restricted merely to the

42

mact of planning. The activity of actually renting an immovable property is an activity which is not covered under ‘planning’ but can be termed as an action consequent to planning. Such consequent activities are not covered under the scope of ‘planning’ and therefore the service of renting of immovable property is not covered under this function

The said function is by no stretch of imagination related to the act of renting out the immovable property.

Water supply for domestic, industrial and commercial purposes

5

The literal meaning of the said functions clearly rules out the coverage of renting of immovable property from its ambit

Public health, sanitation, conservancy and solid waste management

6

The act of renting of immovable property is certainly not covered under the said function

Public amenities including street lighting, parking lots, bus stops and public conveniences

17

In view of the above it is amply clear that the services provided in the instant case i.e. renting of immovable property for business or commerce is not covered under Article 243W of the Constitution. Therefore, the second part of the condition is not fulfilled and therefore the exemption under Sr. No. 39 of Notn. No. 25/2012-ST is not admissible to the services of renting of immovable

property.

48. I find that it has been alleged in the show cause notice that the assessee

had contravened the provisions of

(a) Section 67 of the Finance Act, 1994 read with Rule 6(1) of the Service


their Service Tax Liability at the specified rates and in such manner and

within such period as discussed supra;(b) Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax

Rules, 1994 inasmuch as they failed to pay the Service Tax on the gross

amount of Rs.91,20,421/- to the credit of the Central Government, by

the 5th of the quarter immediately following the .calendar quarter, in

which the payments are received, towards the value of taxable services;(c) Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax

Rules, 1994 inasmuch as they failed to submit a correct half-yearly'Tov Aicr'iiftiiDrn._____ ________ 4.1______

along with a copy of the Challan in form GAR-7, for the quartdfc


48.1 For this purpose, I will be required to refer to Sections 67,68 and 70 of the

Finance Act, 1994 as well as Rule 6 and 7 of the Service Tax Rules, 1994. Sections 67, 68 and 70 of the Finance Act, 1994 read as under:

SECTION 67. Valuation of taxable services for charging service tax.—(1) Subject to the provisions of this Chapter, where service tax is chargeable on any taxable

sendee with reference to its value, then such value shall,—(1) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him;

(ii) in a case where the provision of service is for a consideration not wholly or partly consisting of

money, be such amount in money as, with the addition of service tax charged, is equivalent to the

consideration;(Hi) in a case where the provision of service is for a consideration which is not ascertainable, be

the amount as may be determined in the prescribed manner.(2) Where the gross amount charged by a service provider, for the service proidded or to be

provided is inclusive of service tax payable, the value of such taxable sendee shall be such

amount as, with the addition of tax payable, is equal to the gross amount charged.(3) The gross amount charged for the taxable service shall include any amount received towards

the taxable sendee before, during or after provision of such sendee.(4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such

manner as may be prescribed.

Explanation.—For the purposes of this section, —^consideration” includes—(i) any amount that is payable for the taxable services provided or to be provided;(ii) any reimbursable expenditure or cost incurred by the service proidder and charged, in the

course of providing or agreeing to provide a taxable service, except in such circumstances, and

subject to such conditions, as may be prescribed;(Hi) any amount retained by the lottery distributor or selling agent from gross sale amount of lottery ticket in addition to the fee or commission, if any, or, as the case may be, the discount received, that is to say, the difference in the face value of lottery ticket and the price at which the

distributor or selling agent gets such ticket.* it it it(b)( 1

(c)“gross amount charged” includes payment by cheque, credit card, deduction from

account and any form of payment by issue of credit notes or debit notes and [book adjustment, and any amount credited or debited, as the case may be, to any account, whether called

“Suspense account” or by any other name, in the books of account of a person liable to pay service

tax, where the transaction of taxable service is ivith any associated enterprise.

SECTION 68. Payment of service tax.—(1) Every person providing taxable service to any person shall pay service tax at the rate specified in section} 66B] in such manner and within such period as may be prescribed.

(2) Notwithstanding anything contained in sub-section (1), in respect of [such taxable services as

may be notified by the Central Government in the Official Gazette, the service tax thereon shall be

paid by such person and in such manner as may be prescribed at the rate specified in section

44

J

[66B] and all the provisions of this Chapter shall apply to such person as if he is the person liable

for paying the service tax in relation to such service.

Provided that the Central Government may notify the service and the extent of service tax which

shall be payable by such person and the provisions of this Chapter shall apply to such person to

the extent so specified and the remaining part of the service tax shall be paid by the service ° prot/ider.

SECTION 70. Furnishing of returns.—(1) Every person liable to pay the service tax shall himself assess the tax due on the services

provided by him and shall furnish to the Superintendent of Central Excise, a return in such form

and in such manner and at such frequency and with such late fee not exceeding twenty thousand

rupees, for delayed furnishing of return, as may be prescribed.(2) The person or class of persons notified under sub-section (2) of section 69, shall furnish to the

Superintendent of Central Excise, a return in such form and in such manner and at such frequency

as may be prescribed.

Rule 6 of the Service Tax Rules, 1994 reads as under:

6. Payment of service tax(1) The service tax shall be paid to the credit of the Central Government,-(i) by the 6th day of the month, if the duty is deposited electronically through internet banking; and(ii) by the 5th day of the month, in any other case, immediately following the calendar month in

which the service is deemed to be provided as per the rules framed in this regard:Provided that where the [assessee is a one person company whose aggregate value of taxable

services provided from one or more premises is fifty lakh rupees or less in the previous financial year, or is an individual or proprietary firm or partnership firm or Hindu Undivided Family],inserted

iride Notification 19/2016-service tax the service tax shall be paid to the credit of the Central Government by the 6th day of the month if the duty is deposited electronically through internet banking, or, in any other case, the 5th day of the month, as the case may be, immediately follounng

the quarter in which the service is deemed to be provided as per the rules framed in this regard :

[Provided further that the service tax on the service deemed to be provided in the month of March, or the quarter ending in March, as the case may be, shall be paid to the credit of the Central Government by the 31st day of March of the calendar year.]

[Provided also that in case of such individuals, partnership firms and one person companies

whosefsubstituted vide Notification 19/2016-Service Tax [aggregate value of taxable services

provided from one or more premises is fifty lakh rupees or less in the previous financial year, the

service provider shall have the option to pay tax on taxable services provided or [agreed] to be

provided by him up to a total of rupees fifty lakhs in the current financial year, by the dates

specified in this sub-rule with respect to the month or quarter, as the case may be, in which

payment is received.}

[Provided also that in the case of an assessee in the [State of Tamil Nadu State of Tamil Nadu and

the Union Territory of Puducherry (except Mahe& Yanam)], the service tax payable for the month of November, 2015, shall be paid to the credit of the Central Government by the 20th day of December, 2015.]

*Prowded also that in case of online information and database access or retrieval services provided

or agreed to be provided by any person located in a non-taxable territory and received by non- assessee online recipient, the service tax payable for the month of December, 2016 and January, 2017, shall be paid to the credit of the Central Government by the 6th day of March, 2017.

(1A) Without prejudice to the provisions contained in sub-rule (1), every person liable to pay service

tax, may, on his own volition, pay an amount as service tax in advance, to the credit of the Central Government and adjust the amount so paid against the service tax which he is liable to pay for the

subsequent period:

Provided that the assessee shall,-(i) intimate the details of the amount of service tax paid in advance, to the jurisdictional Superintendent of Central Excise within a period of fifteen days from the date of such payment; and(ii) indicate the details of the advance payment made, and its adjustment, if any in the subsequent return to be filed under section 70 of the Act.]

1(2) Every assessee shall electronically pay the service tax payable by him, through internet banking:Provided that the Assistant Commissioner or the Deputy Commissioner of Central Excise, as the

case may be, having jurisdiction, may for reasons to be recorded in writing, allow the assessee to

deposit the service tax by any mode other than internet banking.]

(2A) For the purpose of this rule, if the assessee deposits the service tax by cheque, the date of presentation of cheque to the bank designated by the Central Board of Excise and Customs for this

purpose shall be deemed to be the date on which service tax has been paid subject to realization of that cheque.

(3) Where an assessee has issued an invoice, or received any payment, against a sendee to be

provided which is not so provided by him either wholly or partially for any reason, [or where the

amount of invoice is renegotiated due to deficient provision of service, or any terms contained in a

contract], the assessee may take the credit of such excess sendee tax paid by him, if the assessee.-(a) has refunded the payment or part thereof, so received for the sendee provided to the person from

whom it was received; or](b) has issued a credit note for the value of the service not so provided to the person to whom such

an invoice had been issued.

(4) Where an assessee is, for any reason, unable to correctly estimate, on the date of deposit, the

actual amount payable for any particular month or quarter, as the case may be, he may make a

request in writing to the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, giving reasons for payment of service tax on provisional basis

and the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as

the case may be, on receipt of such request, may allow payment of service tax on provisional basis

on such value of taxable sendee as may be specified by him and the provisions of the [Central Excise Rules, 2002](inserted vide Notification 19/2016 - Service Tax) , relating to provisional assessment, except so far as they relate to execution of bond, shall, so far as may be, apply to such assessment]

(4A)Notwithstanding anything contained in sub-rule (4),-----

46

Rule 7 of the Service Tax Rules, 1994 reads as under:

7. Returns(1) Bvery assessee shall submit a half yearly return in From ‘ST-3’ or ‘ST-SA’or ST-3C,(Inserted vide

Notification 48/2016 -Service tax) as the case may be, along with a copy of the Form TR-6, in

triplicate for the months covered in the half-yearly return.(2) Every assessee shall submit the half yearly return by the 25th of the month following the

particular half-year.[Provided that the Form 'ST-3' required to be submitted by the 25th day of October, 2012 shall cover

the period between 1st April to 30th June, 2012 only:][Promded further that the Form ST-3 for the period between the 1st day of July 2012 to the 30th day

of September 2012, shall be submitted by the 25th day of March, 2013.](3) Every assessee shall submit the half-yearly return electronically.(3A)Notwithstanding anything contained in sub-rule (1), every assessee shall submit an annual return for the financial year to which the return relates, in such form and manner as may be

specified in the notification in the Official Gazette by the Central Board of Excise and Customs, by

the 30th day of November of the succeeding financial year; Inseted vide Notification 19/2016-

Service Tax.(3B)The Central Government may, subject to such conditions or limitations, specify by notification an

assesse or class of assesses who may not be required to submit the annual return referred to in

sub-rule(3A). Inserted vide Notification 19/2016-Service Tax.(4) The Central Board of Excise and Customs may, by an order extend the period referred to in [subrules (2) and (3A)](substituted vide Notification 19/2016-service Tax) by such period as deemed

necessary under circumstances of special nature to be specified in such order.

48.2 On going through the aforementioned sections and rules and comparing

the same to the issue in hand, I find that:(a) The assessee has violated the provisions of Section 67 of the Finance Act,

1994 read with Rule 6(1) of the Service Tax. Rules, 1994, in as much as

they have failed to work out the correct service tax liability on the actual

value of gross amount received by them towards renting of immoveable

property, at the specified rates in respect of the taxable services provided

by them.

(b) The assessee has violated the provisions of Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994, in as much as they

have failed to determine/work out the correct service tax payable as per

Section 66B on the gross amount of Rs.91,20,421/- and failed to pay it to

the credit of the Central Government, by the 5th of the quarter immediately

following the calendar quarter, in which the payments are received, towards

the value of taxable services.

(c) The assessee has violated the provisions of Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax Rules, 1994, in as much as they

have failed to self-assess the Service Tax and furnish the return for the

period from 2015-16 to 2016-17 in the manner prescribed in Rule 7 of

the Service Tax Rules, 1994. As per the provision of Section 70, every

person liable to pay the service tax shall himself assess the tax due on

the services provided by him and shall furnish to the Superintendent of

Central Excise, a Return in such form in such manner and at such

frequency/time as prescribed under the provisions of Rule 7 of the

Service tax Rules 1994.

48.3 It has also been alleged in the show cause notice that the assessee has not

disclosed the full amount of consideration received by them on renting of

immovable property in the ST-3 returns filed by them for 2015-16 and 2016-17

and has therefore, suppressed the material facts from the department; that the

assessee has shown an income of Rs 14,25,36,690/- from renting of immovable

property in their financial records in 2015-16 and 2016-17 whereas in ST-3

returns filed during the same period, the income from renting of immovable

property is shown as Rs. 13,34,16,269/- ; that therefore, unpaid service tax of

Rs. 13,35,239/- on the differential gross value of Rs.91,20,421/- is liable to be

demanded and recovered from the assessee under the proviso to Section 73(1) of

the Finance Act, 1994 alongwith interest under Section 75 of the said Act, ibid; that by the act of not disclosing the full amount of consideration received on

account of renting of immovable property, the assessee is liable for penal action

under Section 78(1) of the Act, ibid.

48.4 For the purpose, I will be required to refer to Sections 73(1), 75 and 78(1) of

the Finance Act, 1994 which read as under:

SECTION 73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded.—

(1)“Where any service tax has not been levied or paid or has been short-levied or short-paid or

erroneously refunded, the 4[Central Excise Officer} may, within 5'eighteen months' from the

relevant date, serve notice on the person chargeable with the service tax which has not been

levied or paid or which has been short-levied or short-paid or the person to whom such tax refund

has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice”

Provided that where any service tax has not been levied or paid or has been short-levied or short- paid or erroneously refunded by reason of -

(a) fraud; or(b) collusion; or(c) willful mis-statement; or(d) suppression of facts; or(e) contravention of any of the provisions of this Chapter or of the rules made there under with

48

intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words1 "eighteen months", the

words "five years" had been substituted.

S1SCTION 75. Interest on delayed payment of service tax.— Every person, liable to pay thetax in accordance with the provisions of section 68 or rules made there under, who fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay simple interest [at such rate not below ten per cent, and not exceeding thirty-six per

cent per annum, as is for the time being fixed by the Central Government, by notification in the

Official Gazette for the period by which such crediting of the tax or any part thereof is delayed :]

Provided that in the case of a person who collects any amount as service tax but fails to pay the

amount so collected to the credit of the Central Government, on or before the date on which such

payment is due, the Central Government may, by notification in the Official Gazette, specify such

other rate of interest, as it may deem necessary:

Provided further that in the case of a service provider, whose value of taxable services provided

in a financial year does not exceed sixty lakh rupees during any of the financial years covered by

the notice or during the last preceding financial year, as the case may be,such rate of interest,

shall be reduced by three per cent per annum.

“SECTION 78. Penalty for failure to pay service tax for reasons of fraud, etc. — (1) Where any service tax

has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, by

reason offraud or collusion or willful mis-statement or suppression of facts or contravention of any

of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person who has been served notice under the proviso to sub-section (1) of section 73 shall, in addition to the service tax and interest specified in the notice, be also liable to

pay a penalty which shall be equal to hundred per cent, of the amount of such sendee tax :

Provided that in respect of the cases where the details relating to such transactions are recorded

in the specified records for the period beginning with the 8th April, 2011 upto the date on which

the Finance Bill, 2015 receives the assent of the President (both days inclusive), the penalty shall be fifty per cent, of the sendee tax so determined :

Provided further that where service tax and interest is paid within a period of thirty days of—

the date of sendee of notice under the proviso to (i) sub-section (1) of section 73, the penalty

payable shall be fifteen per cent, of such sendee tax and proceedings in respect of such sendee

tax, interest and penalty shall be deemed to be concluded;

(ii)the date of receipt of the order of the Central Excise Officer determining the amount of sendee

tax under sub-section (2) of section 73, the penalty payable shall be twenty-five percent, of the

service tax so determined :

Provided also that the benefit of reduced penalty under the second proviso shall be available only

if the amount of such reduced penalty is also paid within such period :

Explanation. — For the purposes of this sub-section, “specified records” means records includingronuired tn he mnint.ained bu an assesses in accordance with any lawsln+n n o rtr&

for the time being in force or where there is no such requirement, the invoices recorded by-the £

assessee in the books of accounts shall be considered as the specified records.

48.5. On going through the provisions of Section 73(1) and comparing the

to the issue in hand, I find it to be undoubtedly true that the assesseesamehas not disclosed the full amount of consideration received by them on renting

of immovable property in the ST-3 returns filed by them for 2015-16 and 2016-

17 and has therefore, suppressed the material facts from the department. The

assessee had shown an income of Rs. 14,25,36,690/- from renting of immovable

property in their financial records in 2015-16 and 2016-17 and shown the

from renting of immovable property as Rs. 13,34,16,269/- only in their

ST-3 returns filed during the said period. Thus, the assessee had deliberately

suppressed the material facts from the department by not paying the Service

tax on the full amount of income received by them from renting of immovable

property, evading the payment of service tax in the process and their

malafide intention comes to the fore. The assessee is a registered Service Tax

assessee and knows the procedure, Rules, regulations and act there under and

income

also undertook to comply with conditions prescribed in the said rules. They are

working under self assessment regime and are bound to be honest while

discharging their service tax liability, which they failed to do. The assesee has

failed to properly discharge their Service Tax liability by nonpayment to the

Government account by way of’wilful misstatement/suppression of facts and

contravention of the provisions of the Act with an ulterior motive ter evade

payment of Service Tax. The assessee provided the taxable services, but did not

pay the Service tax due on full/actual amount received by them towards renting

of immovable property and failed to credit them to the Government account by

reason of wilful misstatement/suppression of facts and by way of contravention

of the provisions of Section 67, 68, and 70 of the Finance Act, 1994 and Rules

made there-under with an intent to evade the payment of Service Tax. I, therefore, find that the extended period of limitation of five years, under proviso

to Section 73(1) of the Finance Act, 1994 is required to be invoked in this case

to recover the non-paid service tax to the tune of Rs. 13,35,239/- as detailed

above, and the same is required to be demanded and recovered under

Section 73(1) of the Finance Act, 1994. Further, Section 75 of the Finance

Act, 1994 clearly stipulates that any person who is liable to pay the tax in

accordance with the provisions of section 68 or rules made there under, who

fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay simple interest [at such rate

not below ten per cent, and not exceeding thirty-six per cent, per annum), as is

for the time being fixed by the Central Government. Therefore, in view of the

50

the above, the amount demanded is required to be recovered along with

interest under Section 75 of the Finance Act, 1994.

48.6 Further, I find that as per the provisions of Section 78(1) of the Finance

Act, 1994, where any service tax has not been levied or paid, or has been short-

levied or short-paid, or erroneously refunded, by reason of fraud or collusion or

wilful mis-statement or suppression of facts or contravention of any of the

provisions of Chapter V of the Finance Act, 1994 or of the rules made thereunder

with the intent to evade payment of service tax, the person who has been served

notice under the proviso to sub-section (1) of section 73 shall, in addition to the

service tax and interest specified in the notice, be also liable to pay a penalty

which shall be equal to hundred per cent of the amount of such service tax. In

the present case, it is very much apparent that the assessee had deliberately

suppressed the material facts from the department by not paying the Service

tax on the full amount of income received by them from renting of immovable

property, evading the payment of service tax in the process. I also find that

they have not paid the service tax within the prescribed time limit and have

contravened the provisions of Chapter V of the Finance Act, 1994 and the rules

made thereunder with intent to evade payment of service tax and would therefore

be liable for penal action under the provisions of Sections 78(1) of the Act, in

addition to the service tax and interest under Section 75 of the Act.

48.7 I find that the assessee has agreed with the observation of the audit party,

accepted their service tax liability and voluntarily paid the tax of Rs. 13,35,239/-

vide debit entry no. DI2406180282757 dated 19.06.2018 which is required to beappropriated and adjusted against the said demand. I also find that the assessee

However, thehas refused to pay the interest and penalty on the same.' aforementioned demand is required to be recovered alongwith interest under

Section 75 of the Finance Act, 1994 and penalty under Section 78(1) of the said

Act for the reasons discussed in the foregoing paras.

49. The next issue is regarding non-payment of service tax on other taxable

services provided by the assessee for the financial years 2015-16 and 2016-17

raised vide Revenue Para-No: 06 of FAR No:2254/2017-18 dated 23.07.2018

issued in respect of M/s. Gujarat Industrial Development Corporation,

Ahmedabad. The same is as under:

Revenue Para 06:. Non payment of Service Tax on other taxable services:During the course of audit, on verification of the financial records of the

it was observed that the assessee had collected fees/charges from theirassessee,customers during the F. Y. 2015-16 and 2016-17, reflected under the head Misc.

Income in their financial records, as under:

2016-172015-16Fees/ chargesSr. No.41,36,30624,32,883Collateral Security Fees0151,41,02691,59,849Subletting Fees02

210,96,5398,67,300Sub Division Fees0395,90,17415,13,182Adjoining Charges04

468,59,68420,383Amalgamation fees05

8,68,23,7291,39,93,597Total Income

The reasons cited by the assessee for collecting the above Fees and the nature of

such fees are as below:

Collateral Security Fees:If any person to whom a plot has been allotted by the assessee wishes to avail a

loan by mortgaging the Plot/Shed allotted to them, then he has to take

permission of the assessee. If the Plot allotted to him is mortgaged to a third

Party, then the assessee collects 1% Fees from the original allottee which is

termed as “Collateral Fees”. These charges are collected only if property belonging

to original allottee is offered as collateral by any third party.

(i)

Subletting Fees:GIDC allots plots on lease hold basis. If any allottee of the corporation wants to

sub-let the property allotted to them, they have to take permission of the

corporation for the same. The Corporation collects prescribed charges from the

allottee as per policy of the corporation for such permission, which is termed as

“Subletting Charges”. These charges are collected only at the time of giving

approval of sub-letting of plot/ shed.”

(ii)

(iii) Sub Division Fees:If any allottee of GIDC wants to sub divide the plot allotted to them then it has to

apply to the corporation for sub division of the plot. The Corporation collects

prescribed charges from the allottees as per the policy of the corporation for such

division of plot, which is termed as “Sub-Division Fees”. These charges are

collected only at the time of giving approval of sub-division of plot.

(iv) Adjoining Charges:If any allottee of GIDC wants expansion and applies to the corporation for

allotment of plot adjoining to their existing unit, the corporation allots the sameafter charging extra premium over and above regular allotment price of the

particular plot as per the policy of GIDC, which is termed as “Adjoining

Charges”. These charges are collected only at the time of allotment of adjoining

plot.52

(V) Amalgamation Fees:If any allottee of GIDC wants to merge the various plots allotted to them into a

single plot then they have to apply to the corporation for amalgamation of their

plots. The corporation collects prescribed charges from the allottee as per the

policy of the corporation for such merger of plots, which is termed as

“Amalgamation fees/ charges”. These charges are collected only at the time of

giving approval of amalgamation of plot.

49.1 It is apparent from the description provided by the assessee on the nature

of fees collected by them, that such fees are collected from the allottees/plot

holders in lieu of permitting such allottees to use the plots allotted to them for

expansion or furtherance of their respective business. Thus, collateral security

fees are collected in lieu of facilitating the plot holder to avail loans against

mortgaging of property. Similarly, subletting fees, Sub division fees, Adjoining

fees and Amalgamation fees are collected for permitting the plot holders to sub-let

plots, sub-divide plots, acquire the plots adjoining their own plots and to mergeAll the arrangements such as mortgaging, sub

dividing, sub-letting, adjoining and amalgamating, affects the nature of the

rented plots and directly affects occupation, enjoyment or exploitation of an

immovable property. The service provided by the assessee has also resulted in

acquisition of rented plots which has enhanced the value of the plots and made

easy availability of loans to the plot holders as a result of mortgaging the plots. I, therefore, find that all such activities for which the assessee has charged fees

have affected the nature of the plots rented out to such plot holders/allottees by

the assessee on lease hold basis. Besides, such plots have been used by the

allottees in the course or furtherance of business or commerce. Thus, the ‘Misc

Income’ reflected in the Balance Sheet consisting of collateral security fees, subletting fees, Sub division fees, Adjoining fees and Amalgamation fees, etc:, is

actually consideration received by the assessee from the plot holders, in return

for facilitating the expansion of their businesses.

the plots allotted to them.

49.2 I find that the various fees such as Collateral Security fees, Subletting

fees, Sub-division fees, Adjoining fees and amalgamation fees, etc., shown

under the head ‘Misc Income’ in the financial records is consideration received

by the assessee from the plot holders/allottees for services provided by the

assessee to the plot holders, who have undertaken such acts which are of

consequential nature to the purpose for which they were initially allotted the

plots in the first place. Therefore, by allowing or permitting usage of such plots

by the plot holders and thus, enabling and facilitating their businesses, in

return for a consideration, the assessee appears to have provided a service as

defined in Section 65B(44) of the Finance Act, 1994.

49.3 On comparing the provisions of Section 65B(44) (detailed in the earlier

paras) to the issue in hand, and while discussing the issue of taxability on the

aforementioned services provided by the assessee, I find that it does not get covered under the excluded activities mentioned in clause 65B(44)(a) to (c) or

the excluded functions mentioned in Explanation-1 (A) to (C) of the said section. Further, in view of the above provisions, any activity which has been carried out

by a person for another for consideration is a ‘service’. In the instant case, it is

an undisputed fact that the assessee are carrying out various activities for the

persons who desire to establish an industry. Further, it is nobody’s case that

the assessee does not receive any consideration towards such activities. Thus, the assessee is carrying out an activity for another for a consideration and such

activity is squarely covered under the four corners of Section 65B(44) of the

Finance Act, 1994. Further, the assessee has also not disputed the fact that

they are providing services to their customers. I, therefore conclude that the

services provided by the assessee (as detailed above) is a taxable service covered

under Section 65B(44) of the Finance Act, 1994 w.e.f. 01.07.2012 under which

service tax is leviable under Section 66B of the Finance Act, 1994. As per

Section 66B of the Finance Act, 1994, there shall be levied a tax at the rate of

fourteen per cent on the value of all services, other than those services specified

in the negative list, provided or agreed to be provided in the taxable territory by

one person to another and collected in such manner as may be prescribed.

49.4 Having concluded that the services provided by the assessee are covered

under Section 65B(44) of the Finance Act, 1994, and in order to confirm that the

said services are not covered under the negative list of services listed under

Section 66D of the Finance Act, 1994, I find it necessary to refer to the

provisions of the said section which have been mentioned in detail in the earlier

paras.

49.5 I have carefully gone through the entire list of services falling under the

negative list under Section 66D and find that the services provided by the

assessee do not fall under negative list of services under Section 66D of the

Finance Act, 1994. In view of the above, it can be clearly concluded that the

services provided by the assessee are correctly covered as a taxable serviceunder Section 65B(44) of the Finance Act, 1944.

54

49.6 Further, I find that Section 66E of the Finance Act, 1994 defines ‘declared

service’ as any activity carried out by a person for another person for

consideration and declared as such under Section 66E of the said Act. Section

66E of the Finance Act, 1994 reads as under:

SECTION 66E. Declared services. — The following shall constitute declared services, namely:—

(a) renting of immovable property(b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion-certificate by the competent authority.

Explanation.—For the purposes of this clause,^

(I) the expression “competent authority” means the Government or any authority authorised to issue completion certificate under any law for the time being in force and in case of non-requirement of such certificate-from such authority, from any of the following, namely :—(A) architect registered with the Council of Architecture constituted under the Architects Act, 1972 (20 of 1972); or(B) chartered engineer registered with the Institution of Engineers (India); or(C) licensed surveyor of the respective local body of the city or town or village or development or planning authority;(II) the expression “construction” includes additions, alterations, replacements or remodelling of any existing civil structure;(c) temporary transfer or permitting the use or enjoyment of any intellectual property right;(d) development, design, programming, customization, adaptation, upgradation, enhancement, implementation of information technology software;(e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;(f) transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods;(g) activities in relation to delivery of goods

(h) service portion-

49.7 On going through the above provisions, I find that Clause (e) of Section 66E

of the Finance Act, 1994 covers under the ambit of ‘Declared Services’, “agreeing

to the obligation to refrain from an act, or to tolerate an act or a situation, or to

do an act”. It is clear that 'agreeing to the obligation to tolerate an act or a

situation’(or a consideration, qualifies as a 'sem'ce'and therefore, attracts service

tax. From the above, it can be derived that the assessee has agreed to the

obligation to tolerate an act of the plot holders, mortgaging/sub-letting/sub

dividing/amalgamating the plots allotted to them for which the assessee has

charged fees as per the terms and conditions agreed upon by both the parties. On

the part of the plot holders, it was obligatory to apply to the Corporation before

embarking on such acts of mortgaging, sub-letting, sub-dividing, amalgamating

the plots already allotted to them by the assessee or before acquiring adjoining

oi-ik^jv^c lw ulc v^unuiuuii uiai me piot noiaers pay tne considerationxxwxv^vi oc

agreed upon.

49.8 The actual act of allotting plots/ shed is different from the consequential

services provided in respect of such plots/ sheds. By way of taking collateral security fees, the assessee permits the allottee to mortgage the plot/shed for

the purpose of availing loans. Such an activity of permitting mortgage for the

purpose of availing loans is not covered under any of the functions specified

under Article 243W of the Constitution. Similarly, payment of sub-letting fees

grants the liberty to the actual allottee to sub-let the property. Allowing such

sub-letting of the property is also not covered under the scope of Article 243W

of the Constitution. The ‘sub division fees’ are charged for the purpose of

allowing the allottee to divide the property. Such an act of allowing the allottee

to divide the allotted property is also not covered under the scope of Article

243W of the Constitution. The adjoining charges are for the purpose of

allotting an adjoining plot for the purpose of expansion. Such allotment of a

selected plot comes at an extra premium. The act of allotting a plot for

economic and social development does not cover any special act of submitting

to the desires of the service recipient by way of charging extra premium. Thus, this special act of allotting a specific plot to the service recipient is not covered

under scope of Article 243W of the Constitution. Likewise, the amalgamation

fees are also recovered for specialized services of merging various plots which

is an act consequential to the function of economic and social development. The said function of economic and social development is restricted to the act of allotment and all the subsequent services in relation to such plot are addons and are not covered under the scope of Article 243W of the Constitution. Therefore, the exemption under Sr. No. 39 of Notn. No. 25/2015-ST would not

be applicable to the above activities. Thus, I find that none of the

aforementioned services rendered by the assessee (which are having a direct

co-relation with the activity of renting of immovable property) are related to

any of the functions entrusted to a municipality under Article 243W of the

Constitution of India. It, therefore, follows that by agreeing to tolerate the acts

of the plot holders and thus, enabling and facilitating their businesses, the

assessee has also provided a declared service as defined in Section 66E(e) of

the Finance Act, 1994 leviable to Service tax in terms of Section 66B of the

said Act.

49.9 During the period 2015-16 and 2016-17, the assessee has rendered taxable

services for a consideration of Rs. 10,08,17,326/- (Rs. 1,39,93,597/- +Rs.8,68,23,729/-), but has not paid service tax amounting to Rs. 1,50,52,631/-

(Rs. 20,29,072/- + Rs. 1,30,23,559/-). When the auditors pointed out this issue

56

during the course of audit, the assessee disagreed with the objection and did not

pay the aforementioned service tax which was recoverable from them alongwith

applicable interest and penalty.

It has also been alleged in the show cause notice that the assessee has

contravened the provisions of Sections 67, 68, 85 70 of the Finance Act, 1994 and

Rules 6 and 7 of the Service Tax Rules, 1994 as under

50.

(a) Section 67 of the Finance Act, 1994 read with Rule 6(1) of the Service


their Service Tax Liability on the consideration received by them for

provision of taxable services, as discussed supra;(b) Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax

Rules, 1994 inasmuch as they failed to pay the Service Tax to the credit of the Central Government, by the 5th of the quarter immediately

following the calendar quarter, in which the payments are received, towards the value of taxable services;

(c) Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax




50.1 On going through the Sections-67, 68 and 70 of the Finance Act, 1994 and

Rules 6 and 7 of the Service Tax Rules, 1994 (detailed in the foregoing paras) and

comparing the same to the issue in hand, I find that:

(a) The assessee has violated the provisions of Section 67 of the Finance Act, 1994 read with Rule 6(1) of the Service Tax Rules, 1994, in as much as

they have failed to work out the correct service tax liability on the service

value of various services rendered for which they have collected the

fees/charges such as collateral security fees, subletting fees, Sub division

fees, Adjoining fees and Amalgamation fees, collected by the assessee in

lieu of permitting or allowing the plot holders to mortgage, sub-let, subdivide, acquire adjoining plots and amalgamate plots, for use in the

course or furtherance or expansion of their business, at the specified

rates in respect of the taxable services provided by them.- .

(b) The assessee has violated the provisions of Section 68 of the Finance Act, 1994 read’with Rule 6 of the Service Tax Rules, 1994, in as much as they

have failed to determine/work out the correct service tax payable as pe 0

Section 66B on the gross amount of Rs. 1,39,93,597/- (for 2015-16) and on

Rs.8,68,23,729/-(for 2016-17) and failed to pay it to the credit of the - Central Government, by the 5th of the quarter immediately following the

calendar quarter, in which the payments are received, towards the value of

taxable services.

The assessee has violated the provisions of Section 70 of the

Finance Act, 1994 read with Rule 7 of the Service Tax Rules, 1994, in as

much as they have failed to self-assess the Service Tax and furnish the

return for the period from 2015-16 to 2016-17 in the manner prescribed

in Rule 7 of the Service Tax Rules, 1994. As per the provision of Section

70, eveiy person liable to pay the service tax shall himself assess the tax

due on the services provided by him and shall furnish to the

Superintendent of Central Excise, a Return in such form in such manner

and at such frequency/time as prescribed under the provisions of Rule 7

of the Service tax Rules 1994.

(c)

50.2 It has been alleged in the show cause notice that the assessee has not

disclosed the full amount of consideration received by them on provision of

services in the ST-3 returns filed by them for the period 2015-16 and 2016-17

and has therefore, suppressed the material facts from the department. Hence, it appeared that there was a deliberate withholding of essential material information from the department about the taxable services provided and

consideration received by them, and such facts came to the' notice of the

department only during audit. With the introduction of self-assessment and filing

of ST-3 returns online, no documents are submitted by the assessee to the

department and therefore, the department would come to know about such nonpayment of service tax only during audit or preventive/other checks. Hence, it appeared that all these information has been concealed from the department

deliberately, consciously and purposefully to evade payment of service tax. Therefore, in this case all essential ingredients exist to invoke the extended period

under proviso to Section 73(1) of Finance Act, 1994 to demand the service tax not

paid along with interest under Section 75 of the Act ibid. It also appeared that

unpaid Service Tax amounting to Rs. 1,50,52,631/- was required to be recovered

from the assessee under proviso to Section 73(1) of the Finance Act, 1994 along

with interest under Section 75 of the said Act. It also appeared that the assessee

has suppressed the material fact of rendering such service from the department

with intent to evade payment of service tax. By the act of not disclosing the full amount of consideration received on account of provision of service, and by the

58

acts of contravention of the provisions of Sections 67, 68 & 70 of the Finance Act, 1994, the assessee had also rendered themselves liable for penal action under

Section 78(1) of the said Act.

50.3 On going through the provisions of Section 73(1) and comparing the

same to the issue in hand, I find it to be undoubtedly true that the assessee

has not disclosed the amount of consideration received by them on various

services rendered by them such as such as collateral security fees, subletting

fees, Sub division fees, Adjoining fees and Amalgamation fees in the ST-3

returns filed by them for 2015-16 and 2016-17 and has therefore, suppressed

the material facts from the department. The assessee had received an

income/amount of Rs. 1,39,93,597/- (for 2015-16) and Rs.8,68,23,729/-(for

2016-17) towards rendering of the aforementioned services but had not shown

the same in the ST-3 returns filed by them during the said period. Thus, the

assessee had deliberately suppressed the material facts from the department

by not paying the Service tax on the amount of income received by them

from rendering the above services, evading the payment of service tax in the

process and their malafide intention comes to the fore. The assessee is a

registered Service Tax assessee and knows the procedure, Rules, regulations

and act there under and also undertook to comply with conditions prescribed in

the said rules. They are working under self assessment regime and are bound to

be honest while discharging their service tax liability, which they failed to do. However, the assesee has failed to properly discharge their ST liability by

nonpayment to the Government account by way

misstatement/suppression of facts and contravention of the provisions of the

Act with an ulterior motive to evade payment of Service Tax. The assessee

provided the taxable services, but did not pay the Service tax due on the

amounts received by them towards rendering of the aforementioned services

and failed to credit them to the Government account by reason of wilful misstatement/suppression of facts and by way of contravention of the

provisions of Section 67, 68, and 70 of the Finance Act, 1994 and Rules made

there-under with an intent to evade the payment of Service Tax. I, therefore, find that the extended period of limitation of five years, under proviso to Section

73(1) of the Finance Act, 1994 is required to be invoked in this case to recover

the non-paid service tax to the tune of Rs. 1,50,52,631/-, and the same is

required to be demanded and recovered under Section 73(1) of the Finance

Act, 1994. Further, Section 75 of the Finance Act, 1994.clearly stipulates

that any person who is liable to pay the tax in accordance with the provisions

of section 68 or rules made there under, who fails to credit the tax or any part

thereof to the account of the Central Government within the period prescribed,

of wilful

thirty-six per cent, per annum], as is for the time being fixed by the Central 0

Government. Therefore, in view of the above, the amount demanded is required

to be recovered along with interest under Section 75 of the Finance Act, 1994. 1

50.4 Further, I find that as per the provisions of Section 78(1) of the Finance Act,

1994, where any service tax has not been levied or paid, or has been short-levied

or short-paid, or erroneously refunded, by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of

Chapter V of the Finance Act, 1994 or of the rules made thereunder with the

intent to evade payment of service tax, the person who has been served notice

under the proviso to sub-section (1) of section 73 shall, in addition to the service

tax and interest specified in the notice, be also liable to pay a penalty which shall be equal to hundred per cent of the amount of such service tax. From the above, it is very much apparent that the assessee had deliberately suppressed the

material facts from the department by not paying the Service tax on the

amount of income received by them such as collateral security fees, subletting

fees, Sub division fees, Adjoining fees and Amalgamation fees for rendering the

services mentioned hereinabove, evading the payment of service tax in the

process. I also find that they have not paid the service tax within the prescribed

time limit and has contravened the provisions of Chapter V of the Finance Act, 1994 and the rules made thereunder with intent to evade payment of service tax

and would therefore be liable for penal action under the provisions of Sections

78(1) of the Finance Act, 1994 in addition to the service tax and interest under

Section 75 of the said Act.

51. The assessee has contended that their activities are exempted under Sr.

No. 39 of Notification no. 25/2012-ST dated 20.06.2012. The said exemption

applies only to activities in relation to the functions entrusted to a municipality

under article 243W of the Constitution and the same reads as under:

“39. Services by a governmental authority by way of any activity in

relation to any function entrusted to a municipality under article 243

W of the Constitution. ”

I also find that Sr.No.39 of Notification No.25/2012-ST dated 20.06.2012 hasbeen amended vide Notification No.22/2016-ST dated 13.04.2016 with effect from 13.04.2016. After the said amendment, Sr.No.39 of Notification

No.25/2012-ST dated 20.06.2012 reads as under:

60

“39. Services by Government, a local authority or a governmental

authority by way of any activity in relation to any function entrusted

to a municipality under article 243 W of the Constitution.”

In the instant case, the assessee has failed to establish by way of cogent evidence, that the income under dispute pertained to functions entrusted to a

municipality under article 243W of the Constitution. This aspect has also been

discussed herein above and it has been found that the income/amount received

from the services provided as mentioned earlier are not related to such activities. Thus, I find that the exemption under Sr. No. 39 of the Notification no. 25/2012-

ST would not be applicable.

52. The assessee has referred to the following orders which have been issued

in their own case which are as under:

(i) Honorable Commissioner of Ahmedabad South has relied upon the

decision of Bombay High Court in the case of M.I.D.C. and resultantly

has dropped the demand of GIDC, Ahmedabad for the period prior to

01.07.2012 and submitted a copy of the Order-in-Original No.AHM-

EXCUS-COM-011-18-19 dated 28.09.2018. They have stated that in the

said order, for the income of post negative list i.e. from 01.07.2012, Honorable Commissioner of Ahmedabad South has relied upon the entry

No.39 of the Mega Exemption Notification No.25/2012 dated 20.06.2012

by considering GIDC as a Governmental Authority and resultan tly has

dropped the demand of G.I.D.C., Ahmedabad w.e.f. 01.07.2012.(ii) Honorable Commissioner of Rajkot has relied upon the entry No.39 of the

Mega Exemption Notification No.25/2012 dated 20.06.2012 by

considering GIDC as a Governmental Authority and resultantly has

dropped the demand of G.I.D.C., Rajkot w.e.f. 01.07.2012 and that in

addition, there is no departmental appeal filed against this order which

has been accepted by the Honorable Chief Commissioner, Central GST

and Central Excise, Ahmedabad Zone. They have submitted a copy of the

Order-in-Original No.RAJ-EXCUS-000-COM-04-17-18 dated 25.10.2017.(iii) Service tax demand has been dropped by the Department in the case of

GIDC, Gandhinagar and GIDC, Mehsana and GIDC Head Office by

relying upon the entry No.39 of the Mega Exemption Notification

No.25/2012 dated 20.06.2012 by considering GIDC as a Governmental Authority; that in their own case in GIDC, Mehsana Region, Commissioner(Appeals), CGST, Ahmedabad has dropped the demand of

‘Miscellaneous Receipts’ income head and has submitted a copy of the

52.1 I have gone through all the aforementioned orders and find that in

respect of (i) above, the Commissioner, COST and Central Excise, Ahmedabad

South has dropped the demand raised in respect of Upgradation Fund, Nonutilisation penalty and Transfer fees w.e.f. 01.07.2012 on the ground that

GIDC is a Governmental Authority and that these charges collected pertain to

‘Regulation of land-use and construction of buildings’ which is one of the

functions entrusted to the municipalities under Article 243W of the

Constitution of India. As regards Sr.No.(ii) above, I find that the Commissioner

of Central Excise and CGST, Rajkot has: (a) dropped the demand raised in

respect of Recovery of fines from conractors on the ground that these are

statutory provisions and no service is involved, hence there is no service tax

liability, (b) dropped the demand of water charges as it is selling of water which

is a trading activity, hence not liable to service tax: (c) Dropped the demand on

Transfer fees, Non-agricultural assessment charges and Infrastructure

Upgradation fund for the period from 01.07.2012 onwards on the ground that

the same are exempted as per Notification No.25/2012-ST dated 20.06.2012. As regards (iii) above, I have gone through the order No.AHM-EXCUS-003-APP-

020 to 22-19-2020 dated 17.07.2019 issued by the Commissioner(Appeals), Central Tax, Ahmedabad in respect of M/s. GIDC, Gandhinagar and find that

the Commissioner(Appeals) has: (a) dropped demands in respect of Svater

charges’ on the ground that supply of water cannot be considered as service

and is hence not liable to service tax and also because services rendered by

Governmental authority or local authority with relation to functions entrusted

to a municipality vide Article 243W of the Constitution of India are exempted

from service tax w.e.f. 01.07.2012. (b) dropped the service tax on miscellaneous

income received towards sub-letting fee, sub-division charges, amalgamation

fee, collateral fee in relation to renting of immovable property on the ground

that services rendered by Governmental authority or local authority with

relation to functions entrusted to a municipality vide Article 243W of the

Constitution of India are exempted from service tax w.e.f. 01.07.2012 as theappellant is a Governmental authority, (c) dropped the service tax on amount

collected as Infrastructure Upgradation fund under renting of immovablebn the ground that services rendered by Governmentalproperty service

authority or local authority with relation to functions entrusted to amunicipality vide Article 243W of the Constitution of India are exempted from

service tax w.e.f. 01.07.2012 as the appellant is a.Governmental authority. However, I find that the aforementioned OIA has not been accepted by the

Department on merits, but on low monetary grounds.

62

52.2 I find that in the present case, the assessee had already admitted their

liability and paid the service tax, noticed on reconciliation of financial records

vis-a-vis the ST-3 Returns filed by them during the period 2015-16 and 2016-

17 pertaining to renting of immoveable properly. Also, the facts of the present

case are distinguishable from the facts of the orders mentioned above as the

issue of Collateral Security fees, Subletting fees, Sub-division fees, Adjoining

fees and amalgamation fees, etc., have not been decided in the above orders of

Commissioner of Central Excise and COST, Ahmedabad and of Commissioner, Central Excise and COST, Rajkot. Further, the order of Commissioner

(Appeals), Central Tax, Ahmedabad, discussed earlier has not been accepted on

merits, by the Department. I also find that Collateral Security fees, Subletting

fees, Sub-division fees, Adjoining fees and amalgamation fees, etc. are the

fees/charges collected by them in lieu of permitting or allowing the plot holders

to mortgage, sub-let, sub-divide, acquire adjoining plots and amalgamate plots, for use in the course or furtherance or expansion of their business, therefore, find that these activities have a direct correlation with the activity of

renting of immovable property and support and facilitation of the businesses of

plot holders undertaken by the assessee, hence as long as the payment was

made (or fee charged) for getting a service in return (i.e., as a quid pro quo for

the service received), it has to be regarded as a consideration for that service

and taxable irrespective of whatever name such payment was called. Further, as discussed earlier. Venting of immovable property’ is defined under Section

65B(41) of the Finance Act, 1994, is a taxable service as defined in Section

65B(44) of the said Act and is also covered under the definition of ‘declared

service’ under Section 66E(a) of the said Act,. Also, as discussed earlier, on

going through the list of functions entrusted to a municipality under Article

243W of the Constitution of India, and comparing the same to the issue in

hand, neither Venting of immovable property’ nor any of the aforementioned

services rendered by the assessee (which are having a direct co-relation with

the activity of renting of immovable property) are related to any of the functions

entrusted to a municipality under Article 243W of the Constitution of India. From the above, it is undoubtedly clear that the assessee had rendered taxable

services as mentioned above, but failed to discharge service tax in the manner

prescribed under the Finance Act, 1994.

I,

53. The assessee has also submitted that there is no'finding in impugned

SCN which can allege that GIDC has intended to evade payment of tax and in

the absence of any finding of “intend to evade” demand cannot be sustained.They have placed reliance on the following decisions:

fi) Continental Foundation v. CCE [2007 [216) E.L.T. 177 (S.C.)]

CCE v. Pioneer Scientific Glass Works [2006 (197) E.L.T. 308

(S.C.)]Pahwa Chemicals Pvt. Ltd. v. CCE [2005 (189) E.L.T. 257 (S.C.)]

Anand Nishikawa Co Ltd. v. CCE (2005 (188) E.L.T. 149]

(ii)

(iii)

(iv)

53.1 I tend to completely disagree with the assessee when they say that there is

no finding in the SCN which can allege that GIDC has intended to evade payment

of service tax. I find that it has been clearly alleged in the SCN that :

‘the assessee has not disclosed the full amount of consideration received by them on

provision of services in the ST-3 returns filed by them for the period, 2015-16 and 2016-17

and has therefore, suppressed the material facts from the department. Hence, it appears

that there is a deliberate withholding of essential material information from the department about the taxable services provided and consideration received by them, and such facts

came to the notice of the department only during audit With the introduction of self-

assessment and filing of ST-3 returns online, no documents are submitted by the assessee

to the department and therefore, the department would come to know about such nonpayment of service tax only during audit or preventive/ other checks. Hence, it appears that all these information has been concealed from the department deliberately, consciously

and purposefully to evade payment of service tax. Therefore, in this case all essential ingredients exist to invoke the extended period under proviso to Section 73(1) of Finance

Act, 1994 to demand the service tax not paid along with interest under Section 75 of the

Act’

In view of the above facts, since there is a clear-cut finding in the show cause

notice itself which alleges that GIDC has intended to evade payment of service

tax, I find that none of the aforementioned judgements quoted above are

applicable to the assessee in the present case.

54. The assessee has further submitted that in the present case, GIDC is a

body corporate of the Government of Gujarat for performing statutory functions

in accordance with the provisions of Gujarat Industrial Act, 1962 and one of its


purposes on long term lease basis. Thus, GIDC being a government body could

not have a malafide intention for non-payment of service tax. Reliance is put on

the following judgments:

(i) CCE v. Bharat Petroleum Corporation Ltd. (2016) 344 ELT 657 (Tri. Hyd.)

(ii) Karnataka State Tourism Dev. Corpn. Ltd. v. CST (2011) 21 STR 51 (Tri.-

Bang.)

(iii) Maharashtra State Seed Certification Agency v. CC&CE (2016) 37 STR

655 (Tri.-Mumbai)

64

(iv) Gujarat Narmada Valley Fertilizers 86 Chem. Ltd. v. CCE (2016) 37 STR

796 (Tri.- Ahmd.)

54.1 I have gone through the aforementioned judgements. I find that the

assessee has compared themselves with other Government bodies and stated that

they being a Government Body similar to the ones mentioned above, could not

have a malafide intention for non-payment of service tax. However, I totally

disagree with this view of the assessee as it has been proved beyond doubt that: (i) the assessee has shown an income of Rs 14,25,36,690/- from renting of

immovable property in their financial records in 2015-16 and 2016-17 whereas in

ST-3 returns filed during the same period, the income from renting of immovable

property is shown as Rs. 13,34,16,269/- i.e. the assessee had not paid service tax

of Rs. 13,35,239/- on the differential gross value of Rs.91,20,421/- (ii) the

assessee had not paid the service tax payable on the gross amount of

Rs. 1,39,93,597/- (for 2015-16) and on Rs.8,68,23,729/-(for 2016-17) amounting

to Rs. 1,50,52,631/- on the charges/amounts collected as Collateral Security fees, Subletting fees, Sub-division fees, Adjoining fees and amalgamation fees, etc. from

the business entities. Both these matters would have remained undetected but

for the audit conducted by the Department. Hence there was a deliberate

withholding of essential material information from the department about the

taxable services provided and consideration received by them, and such facts

came to the notice of the department only during audit and all this information

has been concealed from the department deliberately, consciously and

purposefully to evade payment of service tax. I, therefore, find that none of the

judgements quoted above are applicable to the assessee in the present case.

The assessee has referred to a recent decision by Karnataka High Court,

wherein the Hon'ble HC in case of CST Bangalore Vs. Motor World and other

vide 2012-TIOL-418-HC-KAR-ST has appropriately dealt with the issue of

penalty and applicability of Section 80. I find that the said judgement is not

applicable to the present case as there is no demand of penalties under both

Sections 76 and 78 or penalty under Section 80 of the Finance Act, 1994 in the

instant case. Further, the case of CCE, Meerut-II v. On Dot Couriers & Cargo Ltd. (2006) 6 STJ 337 (CESTAT, New Delhi) referred to by the assessee is also not

applicable to them as they have failed to prove that there was reasonable cause

for failure on their part to make payment of service tax on the amount of

Miscellaneous receipts received by them.

55.



of Delhi V. Jagannath Ashok Kumar, (1987) AIR 2316 (Supreme Court), Apex Court observed that the reasons given by the Arbitrator are cogent and

based on materials on record. Reason varies in its conclusions according to the

idiosyncrasy of the individual, and the time and circumstance in which he



the noticee. 'Reasonable cause' obviously means a cause which prevents a




difficult to give an exact definition of the word, 'reasonable'. Reason varies in its

conclusions according to the idiosyncrasy of the individual and the times and

the circumstances of which the actor, called upon to act reasonably, knows or

ought to know. In Ram Krishna Travels Pvt. Ltd. v. CCE, Vadodara, [2007 - TMI - 977 - CESTAT, MUMBAI] it was held that bonafide belief is a reasonable

cause under section 80 and as such, penalty was set aside following ETA

Engineering Ltd. v. CCE [2005 -TMI - 165 - CESTAT, NEW DELHI]. I find

that all the aforementioned judgements pertain to elaboration of the definition

of the word ‘reasonable’ or ‘reasonable cause’ and it is also not understandable

under what context the assessee has referred to the same as it does not appear

to be of much use in the present context of the case. I therefore, conclude, that

none of these judgements are applicable to the issue in hand.

57. The assessee has also referred to Circular No.89/7/2006 dated

18.12.2006 issued by the Board to support their contention. I have gone

through the said Circular wherein it is mentioned that the Board is of the view

that the activity performed by the sovereign/public authorities under the

provision of the law are in the nature of statutory functions which are done in

public interest, are not in the nature of service to any particular individual for

any consideration and, therefore, no service tax is leviable on such activities. However, the Circular also states that if such authority performs a service, which is not in nature of statutory activity and the same is undertaken for a

consideration not in the nature of statutory, fee/levy, then in such cases, service tax would be leviable, if the activity undertaken falls within the ambit of

a taxable service.

57.1 In this regard, I find that majority of the activities performed by the

assessee are not in nature of statutory activity and the same is undertaken for

66

a consideration not in the nature of statutory fee/levy as discussed earlier and

the said activity undertaken by them falls within the ambit of a taxable service

under the provisions of Section 65B(44) of the Finance Act, 1994.

58. The assessee has further submitted that the arguments as put

forwarded by GIDC substantiates that no service tax is required to be paid onthe amount of transfer fees and that as GIDC bonafide believed that no service

tax is required to be paid, it is sufficient ground of ‘reasonable cause’ and

therefore, no penalty can be levied u/s. 78 of the Act. They have submitted

that according to section 67(2) of the Finance Act, 1994 where the gross

amount charged by a service provider, for the service provided or to be

provided is inclusive of service tax payable, the value of such taxable service

shall be such amount as, with the addition of tax payable, is equal to gross

amount charged.

58.1 In this regard, I find that it has been proved beyond doubt that :(i) the

assessee has shown an income of Rs 14,25,36,690/- from renting of immovable

property in their financial records in 2015-16 and 2016-17 whereas in ST-3

returns filed during the same period, the income from renting of immovable

property is shown as Rs. 13,34,16,269/- i.e. the assessee had not paid service

tax of Rs. 13,35,239/- on the differential gross value of Rs.91,20,421/- (ii) the

assessee had not paid the service tax payable on the gross amount of

Rs. 1,39,93,597/- (for 2015-16) and on Rs.8,68,23,729/-(for 2016-17)amounting to Rs. 1,50,52,631/- on the charges/amounts collected as Collateral Security fees, Subletting fees, Sub-division fees, Adjoining fees and

amalgamation fees, etc. from the business entities. Both these matters would

have remained undetected but for the audit conducted by the Department. Hence there was a deliberate withholding of essential material information from

the department about the taxable services provided and consideration received

by them, and such facts came to the notice of the department only during audit

and all this information has been concealed from the department deliberately, consciously and purposefully to evade payment of service tax. Thus the service

value/income which they received during the period from 2015-16 to 2016-17, which they knew was taxable, was hidden/not shown/not included in the ST-3

return filed by them with a malafide intention and an intent to evade the

payment of service tax and this fact of non-payment of service tax could be

unearthed only because of service tax audit conducted by the department at

the premises of the assessee. Consequently, show cause notice invoking

extended period of limitation of 5 years was issued under Section 73(1) of the

Finance Act, 1994 proposing penalty under Section 78 of the Act. Further, Section 67(2) of the Finance Act, 1994 referred to above by the assessee is not

iAppUCctUie IU LI 1C isauc ill llclliu fcta LilC^ iiavc ihjl paiu oci viVyC. La<v wn Lin-,

aforementioned taxable amounts received by them and therefore the issue of

addition of tax payable to the same to arrive at the gross amount does not

arise.

JB

59. Further, I find that the Government has from the very beginning placed

full trust on the manufacturers/service providers and accordingly measures

like self-assessments etc., based on mutual trust and confidence are in place. Further, a manufacturer/service provider is not required to maintain any

statutory or separate records under the provisions of the Finance Act and

Rules made there under, as considerable amount of trust is placed on them

and private records maintained by them, for normal business purposes are

accepted, practically for all the purposes. All these operate on the basis of

honesty of the assessee; therefore, the governing statutory provisions create an

absolute liability when any provision is contravened or there is a breach of

trust placed on them. From the evidences available on record, it appears that

the assessee has evaded the payment of service tax on the rent on immovable

property received by them as well as the charges/income such as Collateral Security fees, Subletting fees, Sub Division fees, Adjoining charges and

Amalgamation charges received by them for services rendered by them to the

business entities as appearing in their Balance Sheet although they were aware

that it was liable to service tax. Further, this fact would never have come to

light but for the conduct of audit of the financial records of the assessee by the

Department. This act and omission on the part of the assessee is a breach of

trust deposed on them, and are certainly not in tune with government’s efforts

in the direction to create a voluntary tax compliance regime and has invariably

been done with a malafide intention of suppression of facts to evade the

payment of Service Tax.

60. Moreover, in the present regime of liberalization, self-assessment and

filing of ST-3 returns online, no documents whatsoever are submitted by theassessee to the department and therefore the department would come to know

about such wrong doing only during audit or preventive/other checks. In the

case of M/s. Lalit Enterprises [2010 (17) STR 370 (Tri Chennai)], it was held

that in the light of the fact that verification of the records resulted in the

Department coming to know that the assessees did not disclose receipt of service

charges, therefore, five years period has been correctly invoked and applied

against the assessee as the case falls within the proviso to Section 73(1) of the

Finance Act, 1994 and the demand is not barred by limitation. In the case of

M/s Mahavir Plastics [2010 (255) ELT 241 (Tri Mumbai)], it has been held that

if facts are gathered by department in subsequent investigation,it is not correct to

68

#say that the relevant facts were knoivn to the department during the period of

dispute, in such a situation, the decisions of the Apex Court cited by the Id.

Counsel would not be of any avail to the assessee.

In this regard, I would also like to refer to a judgement of the Customs,

Excise and Gold Tribunal of Tamil Nadu dated 20.04.2017 in the case of Eta

Travel Agency Pvt. Ltd. vs CCE on 20 April, 2007 wherein an appeal was filed by

M/s. Eta Travel Agency pvt.ltd. with the Customs, Excise and Gold Tribunal,

Tamilnadu against an order passed by the Commissioner of Service Tax in

adjudication of show-cause notice dated 16.11.2005 issued by the Additional

Director-General of Central Elxcise Intelligence, Chennai Zonal Unit covering the

period July 2003 to November 2004. In the impugned order, the Commissioner

demanded service tax of over Rs. 1.68 crores together with education cess of Rs.

62,080/- for the aforesaid period from the appellants under the pn vise to

Section 73 (1) of the Finance Act 1994, also demanded interest on the service

tax amount under Section 75 of the Act and. imposed penalties under Sections

76 8s 78 of the Act. In this case, the Tribunal held as under:

61.

“The extended limitation provisions of Section 73 ill of the Finance Act 1994 as amended w.e.f 10.9.2004 [vide Finance (No. 2) Act, 2004} are similar to those of Section 11 All] of the Central Excise Act. Under these provisions, the period of limitation for recovery of tax/duty is five years

where such tax/duty has remained non -leoied, non paid, short-levied or short-paid or has been

erroneously refunded by reason of fraud, collusion, wilful mis-statement or suppression of facts, or contravention of the relevant provisions of law with intent to evade payment of tax/duty. The

question whether the demand, of service tax for the period from 10,9.2004 is time-barred has to be

determined with reference to the amended provisions of Section 73(1) ibid. We note that two of the

ingredients required for invoicing the extended period of limitation under these provisions were

alleged in the show-cause notice against the appellants and the same have been established in

the impugned order, which are (i) suppression of facts and (iij contravention of Sections

68, 69 and 70 of the Finance Act 1994 by the appellants. The decisions cited by counsel, which

are inapplicable to the present case for the period prior to 10.9.2004, are distinguishable on facts

from the present case for the period from. 10.9.2004.11. In the result, the entire demand of service tax raised on the appellants by the Commissioner

under Sub-section (1) of Section 73 of the Finance Act, 1994, along with interest under Section

75 of the Act, is upheld. ”

61.1 I find that the aforementioned judgement of Customs, Excise and Gold

Tribunal, Tamilnadu is squarely applicable to the instant case as it has been

proved beyond doubt that the said noticee has suppressed the facts by willful

misstatement and ..malafide intention and contr^VQned the provisions of

Sections 67, 68 and 70 of the Finance Act, 1994 along with'Rules 6 and 7 of the

Service Tax Rules, 1994 in the present case and the demand has been issued by

invoking the extended period of limitation of 5 years.

04. t1 urmer, uic men cjaccjuvc pi wvioivuo

the Central Excise Tariff Act, 1985, "as repealed vide Section 174(1) of the COST

Act, 2017 and the then effective provisions of the Chapter V of the Finance Act,

1994, as omitted vide Section 173 of the COST Act, 2017, and the then effective

provisions of the Cenvat Credit Rules, 2004, as superseded vide notification

no.20/2017-CE (NT) dated 30.06.2017, have been saved vide Section 174(2) of

the COST Act, 2017 and notification no. 20/201.7-CE (NT) dated 30.06.2017.

Therefore, the provisions of the said repealed/amended Acts and Rules made

there under are rightly enforceable for the purpose of demand of duty, interest,

etc. and imposition of penalty under this notice. As per Section 142(8)(ai) of the

2017, where in pursuance of an assessment or adjudication

proceedings instituted, whether before, on or after the appointed day, under the

existing law, any amount of tax, interest, fine or penalty becomes recoverable

from the person, the same shall, unless recovered under the existing law, be

recovered as an arrear of tax under this Act.

LJ.1V-'1 V—’ J. i L-l

m

COST Act

63. In view of my above fihdings, I pass the following order:

ORDER

I confirm the service tax of Rs. 13,35,239/-(Rupees thirteen lakhs

thirty five thousand two hundred and thirty/ nine only) under the

proviso to Section 73(1) of the Finance Act, 1994 by invoking

extended period of five years, under the provisions of the Finance

Act, 1994 and the Central Goods & Services Tax Act, 2017 and

order to adjust and appropriate the amount, of Rs. 13,35,239/-

already paid by M/s. Gujarat Industrial Development Corporation,

Ahmedabad under the Proviso to Section 73(1) of the Finance Act,

1994, as amended.

(i)

I confirm the Service tax of Rs.l ,50,52,631 /- (Rupees one crore fifty .

lakhs fifty two thousand six hundred and thirty one only) under the

proviso to Section 73(1) of the Finance Act, 1994, as-amended, by

invoking extended period of five years and order for recovery of the

same from the said assessee, under the provisions of the Finance

Act, 1994 and the Centra] Goods & Services Tax Act, 2017,

(ii)

Interest, at appropriate rate, should also be charged on the

confirmed demands of Rs, 13,35,239/- and 'Rs. 1,50,52,631 /-

(iii)

vo

t

• m (under the proviso to Section 75 of the Finance Act 1994 as

amended from time to time). '

(iv) 1 impose a penalty of Rs. 1,63,87,870/- (One crore, sixty three

lakhs, eighty seven thousand, eight hundred and seventy) on thesaid assessee in respect of the demands confirmed in' (ij and (ii)

«above in terms of the provisions of Section 78(1) of the Finance Act, 1994 for suppressing the material facts of providing/receiving of

Taxable Sen/ice from the department and for not disclosing the

value of the said taxable service to the department with solo

intention to evade payment of applicable Service Tax and

contravention of the provisions of Chapter V of the Finance Act, 1994 and Rules made thereunder with intent to evade Sendee Tax

as mentioned hereinabove, and order for recovery of the same from, the assessee, under the provisions of the Finance Act, 1994 and the

Central Goods 85 Services Tax Act, 2017. However, in view of clause

(ii) of the second proviso to Section 78 (1) of the Act, if the amount of Service Tax confirmed and interest thereon is paid within a

period of thirty days from the date of receipt of this order, the

penalty shall be twenty five percent of the said amount, subject to

the condition that the amount of such reduced penalty is also paid

within the said period of thirty days. t

(MOHIT AGRAWAL) Additional Commissioner,

Central Goods 85 Service Tax, Ahmedabad South.

Date: 13.11.2020F. No. ST C/04-46/GI DC/O&A/2019-20 DIN-20201164WS0000818936

To,M/s. Gujarat Industrial Dejvelopment Corporation, Fadia Chambers, 3rd Floor,Ashram Road, Ahmedabad

Copy to:-lJ.; The Hon’ble Principal Commissioner, CGST, Ahmedabad-South.The Deputy Commissioner, Central GST, Division-VI,Ahmedabad South.The Superintendent, Central GST, .Range-V,Ahmedabad South.The Assistant Commissioner (RRA), CGST Adamedabad South forinformation and necessary action. j^P"The Superintendent (Systems), Central GST, Ahmedabad South forupload on website.

(6) Guard File.

(1)

Division-VI,(8)

(4)

office of the principal commissioner of cgst, ahmedabad south

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