CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL New Delhi PRINCIPAL BENCH – COURT NO. 3 [Arising out of Order-in-Original No. 07/2021-ST dated 31.03.2021 passed by the Additional Director General (Adjudication), Directorate General of GST Intelligence, New Delhi]

SMS-AAMW Tollways Private Limited : Appellant Spark Multi-level Car Parking Kamla Nagar, New Delhi Vs Additional Director General : Respondent (Adjudication) DGGSTI- New Delhi West Block-VII, Wing-6, 2^nd Floor, R. K. Puram, New Delhi-110066 WITH Service Tax Appeal No. 51909 Of 2021 [Arising out of Order-in-Original No. 07/2021-ST dated 31.03.2021 passed by the Additional Director General (Adjudication), Directorate General of GST Intelligence, New Delhi]

Shri Ajay Agrawal : Appellant Director of M/s SMS-AAMW Tollways Private Limited, Spark Multi-level Car Parking Kamla Nagar, New Delhi Vs Additional Director General : Respondent (Adjudication) DGGSTI- New Delhi West Block-VII, Wing-6, 2^nd Floor, R. K. Puram, New Delhi-110066 APPEARANCE:

Shri B. L. Narasimhan & Shri Kunal Aggarwal, Advocates for the Appellant Shri Aejaz Ahmad, Authorized Representative for the Respondent CORAM :

HON’BLE MS. BINU TAMTA, MEMBER (JUDICIAL)

HON’BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL)

FINAL ORDER No. 50172-50173/2026 Date of Hearing:09.01.2026 Date of Decision:09.01.2026 HEMAMBIKA R. PRIYA The present challenge is to order-in-original No. 7/2021-ST dated 31.3.21 wherein the demand of Rs. 7,64,90,207/- was confirmed along with interest and penalties. The subject appeal relates to the taxability of amount collected as toll (user fee) from user of toll roads under the category of Business Auxiliary Service under proviso to section 73(1) of the Finance Act, 1994.

2. The brief facts of the case are that the appellant entered into agreement with Municipal Corporation of Delhi¹ under which it was granted rights of collection of toll tax (user fee) at designated sites. MCD is authorised to impose and collect toll and ECC collection at the Toll plazas along the city borders. Accordingly, bids were invited from contractors for collection of toll at specified locations for specified period by issuing tenders for the same. In response to one such tender, the appellant had submitted their proposal which was accepted by MCD. The appellant was thereafter given the right for collection of toll charges and any profit or loss over the bid amount was borne by the appellant. Following the receipt of an intelligence that the appellant was engaged in providing taxable service and was not paying Service tax, the Department initiated investigations. On completion of the investigation, a show cause notice dated 25.04.2018 was issued to the appellant alleging that the appellant was rendering services to the MCD for collecting toll from the user of the road on

1 MCD

their behalf and that on account of these services, the appellant was liable to pay the amount to the MCD only to the extent of bid amount as per the contract and entitled to retain the amount over and above the bid amount towards its consideration for the activities undertaken on behalf of its client i.e. MCD. In this context, reliance was placed on Circular No. 152/3/2012-ST dated February 22, 2012. The said notice was adjudicated vide the impugned order dated 31.03.2021. Hence

the present appeal.

3. At the outset, learned counsel for the appellant submitted that the issue was no more res integra. He submitted that this issue had been settled in favour of the appellant. He contended that the demand of service tax is in direct contradiction to the settled legal position that when collection of toll is undertaken by contractors on principal to principal basis, then such contractor cannot be considered as an agent acting on behalf of the Government body. He further stated that when the arrangement with the contractor mandates payment of a fixed bid amount, regardless of ultimately incurring profit or suffering loss, then the contractor is collecting toll in t