[ORDER PER: ANGAD PRASAD]

The present appeals arise out of Order-in-Original passed by Adjudicating Authority confirming Service Tax demand, along with interest and penalties, on the amount received by the appellant / National Highway Authority of India (NHAI), from contractors towards transfer of “user fee collection rights” for various toll plaza.

2. The Department’s case is that the appellant, by assigning toll collection rights to contractors for consideration, has rendered taxable service and classifiable as “franchise service” for the period prior to 01.07.2012 and as taxable service, not covered under the negative list for the subsequent period.

3. Aggrieved by the impugned orders, the appellant has filed the present appeals.

4. Learned Counsel for the appellant submitted that appellant is a statutory authority constituted under the National Highways Authority of India Act, 1988 (NHAI Act) and functions as an executing agency of the Central Government. The user fee (Toll) is a statutory levy under Section 7 of the National Highways Authority of India Act, 1956 and NHAI merely facilitates its collection.

5. Learned Counsel for the appellant submitted that the contractors do not receive any representational right, hence, the transaction cannot be classified as “franchise service”. It is further submitted that there is no service provider and service recipient relationship between appellants and the contractor.

6. Learned Counsel for the appellant submitted that the activity falls within the ambit of Section 66D(h) of the Finance Act, 1994 (negative list) being related to access to roads. Therefore, activity undertaken by the appellants falls under negative list of services, and hence is a non taxable service.

7. Learned Counsel for the appellant submitted that the appellant acts as an agent of the Central Government, and therefore, the activity is in the nature of sovereign/statutory function. Thus, not liable to pay Service Tax.

8. Learned Counsel for the appellant submitted that the Circular No. 152/3/2012-ST dated 22.02.2012 makes it clear that Service Tax is not leviable on the toll fee paid by the road user. The circular is binding on the authorities / Department. Judicial Precedents have confirmed that circular issued by the Board are binding on them and they cannot be deviate from it. Learned Counsel for the appellant has placed reliance on Supreme Court decision in case of Collector of Central Excise Vadodara Vs Dhiren Chemical Industries [2002 (139) E.L.T 3 (Sc)], wherein, it was held that Departmental clarification or CBEC circulars is binding on revenue. Similarly, there are plethoras of the Court decisions which have followed this judgment and consistently make it clear that the board circular are binding on revenue authorities. In this regard Learned Counsel for the appellant has cited following decisions.

i) Ideal Road Builders Pvt Ltd., Vs Commissioner of Service Tax, Mumbai [2013 (31) S.T.R. 350 (Tri-Mum)]

ii) MMK Toll Road Pvt Ltd., Vs Commissioner of Service Tax-II, Mumbai, [2013 (30) S.T.R. 190 (Tri-Mumbai)]

9. Learned Counsel for the appellant also referred Tribunal Mumbai decision in the case of IDAA Infrastructure Pvt Ltd., Vs Commissioner of Service Tax, Mumbai –II, [2014 (34) S.T.R. 87 (Tri-Mum)], wherein, it was decided that if tolls are collected by the concessionaire on their own account, then such collection is not covered any taxable service.

10. Learned Counsel for the appellant additionally submitted that the transaction falls under Section 66 D(a) of the Finance Act, since, the services are deemed to be rendered by the Central Government itself. The nature of the agreement, the flow of rights and consideration under the contract between the Central Government and the appellant on one hand and the appellant and the contractor on the other hand, in the light of various rules. The appellant is acting on behalf of the Central Government as an agent, but not in its own capacity for conducting any