Service Tax leviable on Collecting Toll Amount on behalf of Corporate Entity: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has held that the act of collecting toll amount on behalf of the corporate entity backed by Government is subject to service tax under the head ‘Business Auxiliary Services’ (BAS) under the Finance Act, 1994.

In the instant case, the Government of Gujarat and Infrastructure Leasing and Financial Service Ltd. (ILFS) jointly promoted a company then known as Ahmedabad Mehsana Toll Road Company Ltd. (AMTRCL), now known as Gujarat Toll Road Investment Company Pvt. Ltd. for the purpose of construction of Ahmedabad-Mehsana Toll Road on Build, Own, Operate and Transfer (BOOT) basis. The said AMTRL selected the Appellant for the design, construction, operation, and maintenance of the Ahmedabad-Mehsana Road Project. The appellant was also awarded a contract for the purpose of operation and maintenance of the said road.

The department held that the activity undertaken by the appellant in respect of Toll collection amount to BAS for the purpose of imposing service tax liability.

For the appellants, it was argued that the issue of toll tickets is not the same as billing.

Rejecting the above argument, the Tribunal held that “Issue of toll ticket is nothing but billing. The activity of billing is identifying the service availed and charging for the same. The appellants in the instant case would be identifying the size of the vehicle and the destination to ascertain toll charges. Thereafter toll ticket is issued and money is collected. In view of the above activities undertaken by the appellant, they would also be covered under clause (iv) of the definition of BAS.”

“In view of the above, we are of the opinion that the decision in case of Intertoll India Consultants (P) Ltd. (supra) is per incurium as it ignores the common parlance definition of the term ‘Customer’. As described above the activity of the appellant would be squarely covered by definition of BAS and would be chargeable to service tax during the period prior to 10.09.2004 also,” the Tribunal said.