𝗖𝗘𝗦𝗧𝗔𝗧 𝗔𝗵𝗺𝗲𝗱𝗮𝗯𝗮𝗱 𝗥𝘂𝗹𝗶𝗻𝗴 𝗼𝗻 𝗦𝗲𝗿𝘃𝗶𝗰𝗲 𝗧𝗮𝘅 𝗟𝗶𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗳𝗼𝗿 𝗦𝗼𝘃𝗲𝗿𝗲𝗶𝗴𝗻 𝗙𝘂𝗻𝗰𝘁𝗶𝗼𝗻𝘀 📢 The Tribunal observed:

"Activities undertaken as mandatory or statutory functions by public authorities under the provisions of any law do not constitute any taxable service, and any fee or amount collected in such cases is not to be treated as consideration for the purpose of levying service tax."

🔍 𝗙𝗮𝗰𝘁𝘀: 𝗖𝗼𝗺𝗽𝗮𝗻𝘆: Vadodara Mahanagar Seva Sadan 𝗜𝘀𝘀𝘂𝗲: The appellant, a Municipal Corporation, rented/leased shops from June 2011 to March 2012. A show-cause notice dated 30.07.2012 demanded service tax, alleging the fees collected fell under the “Renting of Immovable Property” category under the Finance Act, 1994.

𝗣𝗿𝗼𝗰𝗲𝗲𝗱𝗶𝗻𝗴𝘀: The authorities claimed that the fees collected were subject to service tax. The appellant argued that they were performing sovereign functions as per the Bombay Provincial Municipal Corporation Act, 1949, and the fees collected should not be taxable.

⚖️ 𝗝𝘂𝗱𝗴𝗲𝗺𝗲𝗻𝘁: The Tribunal referred to the Nagar Nigam vs. CCE & ST, Meerut (2019) ruling, confirming that fees collected for statutory functions are not subject to service tax. The Tribunal held that since only fees (and not rent) were collected, the impugned order was without merit and the appeal was allowed.

𝗖𝗮𝘀𝗲 𝗜𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻: 𝗧𝗶𝘁𝗹𝗲: Vadodara Mahanagar Seva Sadan vs. Commissioner of Central Excise & ST, Vadodara-I 𝗦𝗘𝗥𝗩𝗜𝗖𝗘 𝗧𝗔𝗫 𝗔𝗽𝗽𝗲𝗮𝗹 𝗡𝗼. 13677 of 2014-DB 𝗢𝗿𝗱𝗲𝗿 𝗗𝗮𝘁𝗲: 29 February 2024

📜 This ruling reinforces that public authorities performing statutory functions are exempt from service tax on fees collected for such activities