Top
Begin typing your search above and press return to search.

Jharkhand Agricultural Marketing Board Not a Service Provider but Merely Supervisory: CESTAT Quashes Service Tax Demand [Read Order]

CESTAT held that the Jharkhand Agricultural Marketing Board, being merely a supervisory body and not a service provider, is not liable to pay service tax on rental income.

Kavi Priya
Jharkhand Agricultural Marketing Board Not a Service Provider but Merely Supervisory: CESTAT Quashes Service Tax Demand [Read Order]
X

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the Jharkhand State Agricultural Marketing Board (JSAMB) was not liable to pay service tax as it was merely a supervisory body and not the service provider in question. JSAMB, the appellant, is a statutory board established by the Government of Jharkhand to oversee agricultural...


The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the Jharkhand State Agricultural Marketing Board (JSAMB) was not liable to pay service tax as it was merely a supervisory body and not the service provider in question.

JSAMB, the appellant, is a statutory board established by the Government of Jharkhand to oversee agricultural marketing across the state. The department issued show cause notices alleging that JSAMB had let out immovable property and collected rent between 2008–09 and 2011–12 without paying service tax under the “Renting of Immovable Property” category. A service tax demand of Rs. 64,85,298 was confirmed by the adjudicating authority, along with interest and penalties under Section 78 of the Finance Act, 1994.

Read More: Relief for Goodyear India: CESTAT Rules Services RenderedOutside India by Foreign Agents Not Taxable Under Reverse Charge [Read Order]

Know the complete aspects of tax implications of succession, Click here

Aggrieved by the order, JSAMB approached the CESTAT. The appellant's counsel argued that JSAMB only supervised the operations of the Agricultural Produce Marketing Committees (APMCs), which were separate legal entities. The counsel submitted affidavits, rental agreements, and PAN cards to show that the APMCs not JSAMB were the actual lessors, received the rent, and filed their own tax returns. They also argued that no suppression of facts existed to justify invoking the extended period of limitation.

The revenue counsel argued that although APMCs executed the rental agreements, they functioned under the direct control of JSAMB. Hence, JSAMB was the true beneficiary of the rental income and liable to pay service tax. They relied on the Supreme Court’s ruling in Krishi Upaj Mandi Samiti v. CCE & ST, Alwar, which held that rental income received by such agricultural market entities was subject to service tax.

Read More: Works Contract Not Taxable Under Commercial or Industrial Construction Services :CESTAT [Read Order]

Step by Step Guide of Preparing Company Balance Sheet and Profit & Loss Account Click Here

The two-member bench comprising R. Muralidhar (Judicial Member) and Rajeev Tandon (Technical Member) observed that rental agreements clearly identified APMCs as the lessors and the rent was deposited directly into their accounts. The board did not own or lease the properties in question and did not receive any rental income.

The tribunal further observed that the Supreme Court decision relied upon by the department applied to the APMCs themselves and not to supervisory boards like JSAMB. Since JSAMB was not the service provider, it could not be held liable for service tax under the “Renting of Immovable Property” category.

The tribunal also held that no case of suppression was made out and the extended limitation period could not be invoked. Consequently, the demand was set aside as time-barred as well. The appellant’s appeal was allowed.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Next Story

Related Stories

All Rights Reserved. Copyright @2019