2022 Supreme(SC) 158

SUPREME COURT OF INDIA
(From the Custom Excise Service Tax Appelate Tribunal)
M.R. Shah, B.V. Nagarathna, JJ.
Krishi Upaj Mandi Samiti, New Mandi Yard, Alwar - Appellant
Versus
Commissioner of Central Excise and Service Tax, Alwar -Respondent
Civil Appeal No. 1482, 1861, 1851, 1850, 1863, 1862, 1860, 1859, 1856, 1858, 3158, 3160, 3369, 3367, 3368, 3370, 3371, 3372, 3373, 3374, 4384, 4382, 4383, 6012 of 2018 Civil Appeal No. 715 of 2019, Civil Appeal Nos. 3356-3358 of 2019
Decided On : 23-02-2022

IMPORTANT POINTS
(1) Taxing Statute – Exemption notification should be strictly construed and given a meaning according to legislative intendment.
(2) Service Tax exemption – Eligibility clause in relation to exemption notification must be given effect to as per language and not to expand its scope deviating from its language.

Headnote:

(A) Interpretation of Statute – Taxing Statute – In a taxing statute, it is plain language of provision that has to be preferred, where language is plain and is capable of determining a defined meaning – Strict interpretation of provision is to be accorded to each case on hand – Purposive interpretation can be given only when there is an ambiguity in statutory provision or it results in absurdity – Exemption notification should be strictly construed and given a meaning according to legislative intendment – Statutory provisions providing for exemption have to be interpreted in light of words employed in them and there cannot be any addition or subtraction from statutory provisions – Notification has to be read as a whole – If any of conditions laid down in notification is not fulfilled, party is not entitled to the benefit of that notification – An exception and/or an exempting provision in a taxing statute should be construed strictly and it is not open to court to ignore conditions prescribed in relevant policy and exemption notifications issued in that regard. (Paras 9.1, 8.2 and 8.3)

(B) Taxation – Service Tax – Rajasthan Agricultural Produce Markets Act, 1961 – Sections 9(2)(xiii), 76, 77 and 78 – Rajasthan Agricultural Produce Markets Rules, 1963 – Rule 45 – Negative List Regime of taxation – Liability to pay service tax under category of “renting of immovable property service” – Respective Market Committees are claiming exemption under Circular No.89/7 /2006 dated 18.12.2006 – As per exemption circular only such activities performed by sovereign / public authorities under provisions of law being mandatory and statutory functions and fee collected for performing such activities is in nature of a compulsory levy as per provisions of relevant statute and it is deposited into Government Treasury, no service tax is leviable on such activities – If such authority performs a service, which is not in nature of a statutory activity and same is undertaken for consideration, then in such cases, service tax would be leviable, if activity undertaken falls within ambit of a taxable service – It will be for assessee to show that he comes within purview of notification – Eligibility clause in relation to exemption notification must be given effect to as per language and not to expand its scope deviating from its language – There is a vast difference and distinction between a charging provision in a fiscal statute and an exemption notification – Under Section 9(2), it is not a mandatory statutory duty cast upon Market Committees to allot/lease/rent shop/platform/land/space to traders – Such an activity cannot be said to be a mandatory statutory activity – Under Act, 1961, it cannot be said to be a mandatory statutory obligation of Market Committees to provide shop/land/platform on rent/lease – If statute mandates that Market Committees have to provide land/shop/platform/space on rent/lease then and then only it can be said to be a mandatory statutory obligation otherwise it is only a discretionary function under the statute – If it is discretionary function, then, it cannot be said to be a mandatory statutory obligation/statutory activity and no exemption to pay service tax can be claimed – Rule 45 does not provide that on deposit of money received by Market Committees into Government Treasury/sub-treasury or a bank duly approved, it ceases to be Market Committee Fund – Appeals dismissed. (Paras 7, 8.4, 9, 10.1 and 12)

Facts of the case:

By impugned common judgment and order, the CESTAT noted that with the introduction of Negative List Regime of taxation w.e.f. 01.07.2012, the services in question were excluded from tax liability and therefore the appellant(s) being an Agricultural Produce Market Committee was/were excluded from tax liability on and after 01.07.2012. The CESTAT also took note of the circular issued by the Board. Accordingly, the CESTAT held that the appellants – respective Market Committees are not liable to service tax on renting of immovable property used for storage of agricultural produce in the market area. CESTAT observed that the respective Market Committees are not liable to service tax on renting shops/sheds/platforms/land in the notified market area for traders for temporary storage of agricultural produce traded in the market. CESTAT also observed that in respect of shops, premises, buildings, etc. rented/leased out for any other commercial purpose other than with respect to the agricultural produce (like bank, general Shop etc.), the same shall not be covered by the Negative List and the market committee(s) shall be liable to service tax. Accordingly, the CESTAT held that the appellants – Market Committees are not liable to service tax for the period after 01.07.2012. The CESTAT also set aside the penalties imposed on the appellants. Feeling aggrieved and dissatisfied with the impugned common judgment and order passed by the learned CESTAT holding that the appellants – respective Market Committees are liable to pay service tax under the category of “renting of immovable property service” for the period upto 30.06.2012, the respective Market Committees located in State of Rajasthan have preferred the present appeals.

Finding of Court:

At this stage, it is required to be noted that it is not the case on behalf of the Market Committees that the activity of rent/lease on shop/land/platform as such cannot be said to be service. However, their only submission is that Market Committees are exempted from levy of service tax on such service/activity as provided under the 2006 Circular which has no substance.

Result : Appeals dismissed.