The Kolkata bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the statutory functions of Orissa Industrial Infrastructure Development Corporation (The Appellant), a statutory corporation established under IDCO Act, 1980 are under various heads namely, Real Estate Agent’s Service, Consulting Engineer’s Service, Technical Testing and Analysis Service etc. and dismissed the appeal against The Commissioner of Central Excise, Customs & Service Tax.
The appellant was a statutory corporation established under the IDCO Act, 1980 to carry out the Governmental functions for the development of industrial infrastructures in the State of Orissa, and all the income of the appellant was related to land acquisition by IDCO of private lands under Land Acquisition Act, 1894 and Government Land settled with IDCO under Orissa Government Land Settlement Act, 1962. After acquisition and settlement, the land vested with IDCO under Section 31 (2) of IDCO Act, 1980 free from all encumbrances and thereafter, handed over to the industrialists/entrepreneurs on a long-term lease basis. They also collect Annual Maintenance Charges (AMC), Incidental Charges, Ground Rent, and cess and damage rent as per Section 57 of IDCO Act, 1980 in addition to land premium.
Accordingly, show-cause notices were issued demanding service tax with interest and penalty as the amount received by the appellants are services rendered under various headings, namely, Real Estate Agent’s Service, Consulting Engineer’s Service, Technical Testing and Analysis Service, etc. the show cause notices were adjudicated, but the order was passed confirming the service tax demand with interest and penalties.
The counsel who appeared on behalf of the appellant submitted that the appellant being a statutory corporation established under the IDCO Act, 1980, was discharging statutory functions for the acquisition of land and sovereign functions of the industries in terms of IDCO Act, 1980, which were related to various State Government’s Order. Therefore, they are not liable to pay service tax.
The counsel further submitted that rent was collected as per the rate prescribed by the Central Government and State Government through the Scheme for the Development of Commercial Handicrafts. Therefore, the demand under the Renting of Immovable Property Service under the said heading was not sustainable.
The counsel further relied on Notification No.41/2016-Service Tax to show that the Central Government was exempted from taxable service on State Government Industrial Development Corporation/ Undertakings to Industrial Units for long-term 30 years or more lease of industrial plots from service leviable U/s.66(b) of the Act.
The counsel who appeared on behalf of the revenue supported the impugned orders. The two-member bench consisting of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) after hearing both sides held that “the appellant is liable to pay the service tax on income from Ekama Hat under heading “Mandap Keeper Service”, the charges under the category of “Maintenance
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