In a recent ruling, the Kolkata bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has set aside the Service Tax demand on the Industrial Promotion and Investment Corporation of Odisha Limited (IPICOL), ruling that no Service Tax is leviable on the statutory body in which amount received in compliance with government directives.
The show cause notice was issued on 01.12.2015 for the period 2009-10 to 2013-14, invoking an extended period of limitation. A total demand Rs. 99,56,304 was raised on Combined Application Fee (CAF) for processing of application under OIFA 2004 & OIFE, 2005 and Amount received from IDCO as per directive of Govt. of Odisha vide letter No.885 dated 24.01.2012 for industrial development.
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The appellant, Industrial Promotion & Investment Corporation of Odisha Limited argued that the demand was unsustainable as they are a statutory authority established to promote industrial development in Odisha by providing support services for the government.
It referenced a prior decision of the tribunal in a similar case (M/s Orissa Industrial Infrastructure Development Corporation vs. Commissioner of Central Excise, Customs & Service Tax), which held that such statutory bodies are not liable to pay Service Tax on amounts received in compliance with government directives.
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The two member bench of Ashok Jindal (Judicial Member) and K.Anpazhakan (Technical Member) observed that the entire demand falls within the extended limitation period and ruled that invoking this extended period was unjustified. Accordingly, the demand was dismissed with no penalties.
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