Commissioner Corporation Of Madurai vs Commissioner Of GST & Central Excise

M. Ajit Kumar, Member (T)

This appeal is filed against Order in Appeal No. 42/2018 dated 21.3.2018 passed by the Commissioner (Appeals), Coimbatore.

Brief facts of the case are that Corporation of Madurai, the appellant herein, has provided taxable service under the category ‘Renting of Immovable Property Service’ by way of letting the road sides to cable TV network firms and telephone / mobile network operators for laying optical fibre cables and collecting consideration in the name of ‘Annual Track Rent’. It appeared to the department that the appellant’s activity would attract service tax under the category of ‘Renting of Immovable Property Service’ as provided under section 65(105)(90a) of the Finance Act, 1994. It was noticed that the appellant did not discharge the service tax liability on the above service right from 2010 onwards and thus the department issued a letter to the appellant. In reply, the appellant furnished details of service recipients from whom ‘Annual Track Rent’ has been collected for which no service tax has been collected from the year 2010–11 to 2015 – 16. It appeared that the appellant had evaded payment of service tax to the tune of Rs.56,92,926/- for the period from 2010–11 to 2015 – 16. Hence Show Cause Notice dated 28.8.2015 was issued to the appellant proposing to recover the service tax liabilities. After due process of law, the adjudicating authority confirmed the demand along with interest and imposed equal penalty under sec. 78 of the Finance Act, 1994. Penalties of Rs.10,000/- each were also imposed under sec. 77(1)(a) and 77(2) of the said Act. Aggrieved against the said order, the appellant filed appeal before Commissioner (Appeals), who vide the order impugned herein upheld the same. Hence the appellant is now before the Tribunal.

No cross-objection has been filed by the department.

3.1 Shri A. Niraikulam, Consultant appeared for the appellant and Shri M. Ambe, learned Deputy Commissioner (AR) appeared for the department.

3.2 The learned consultant for the appellant submitted that the period from 1.4.2010 to 30.6.2012, being a positive service tax levy regime, there must be a specific statutory provision to levy service tax in the name of Annual Track Rent / Right of Way to collect service tax on the charges collected towards the same. However, no specific levy was imposed under the positive regime. The above view has been confirmed by the CBIC vide Circular F No 332/5/2010-TRU, dated 24.5.2010 wherein it has been clarified that laying of cables under or along side road is not a taxable service under any clause of sub-section (105) or section 65 of the Finance Act, 1994. Therefore, the demand for the period 1.4.2010 to 30.6.2012 is legally not sustainable. Further the Government has issued Retrospective Exemption in respect of the non-levy of service tax on the services by way of granting of ‘right of way’ by ‘local authorities’, vide Notification No. 1/2018-ST dated 30.11.2018 covering the period 1.7.2012 to 30.6.2017 and hence the demand for the period 1.7.2012 to 31.3.2016 is liable to be set aside. In view of the foregoing submissions, he prayed that the entire demand confirmed and the penalty imposed in the impugned order may be set aside and the appeal may be allowed.

3.3 The learned AR Shri M. Ambe supported the findings in the impugned order.

We have heard both sides and perused the appeal records. We find that the matter stands clarified by the Boards Circular dated 24.5.2010 for the period 1.4.2010 to 30.6.2012 and Notification No. 1/2018-ST dated 30.11.2018 for the period 1.7.2012 to 30.6.2017, which covers the period of demand. We hence hold that no service tax was payable by the Appellant by way of letting the road sides to cable TV network firms and telephone / mobile network operators for laying optical fibre cables. The impugned order hence merits to be set aside.

We accordingly set aside the impugned order with consequential relief to the Appellant, if any as per law. The appeal is disposed off accordingly.