KRISHI UPAJ MANDI SAMITI, NEW MANDI YARD, ALWAR Vs. COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, ALWAR

JUDGEMENT

(1.) As common questions of law and facts arise in these group of appeals and as such are arising out of the impugned common judgment and order passed by the Customs, Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi (hereinafter referred to as "CESTAT"), all these appeals are decided and disposed of together by this common judgment and order.

(2.) That the respective appellants herein are the Krishi Upaj Mandi Samiti (Agricultural Produce Market Committees) located in different parts of State of Rajasthan. The respective appellants are established under the provisions of the Rajasthan Agricultural Produce Markets Act, 1961 (hereinafter referred to as "Act, 1961"). That the State Government constituted various Market Committees (including the appellants herein) in the notified market areas to carry out the functions as envisaged in the Act, 1961 and the Rules made thereunder. That the respective appellants regulate sale of agricultural produce in the notified markets. They charge "market fee" for issuing license to traders, agents, factory /storage, company or other buyers of other agricultural produce. The appellants also rent out the land and shops to traders and collect allotment fee/lease amount for such land/shop. That the Revenue was of the view that the appellants are liable to pay the service tax on the services rendered by them by renting/leasing the lands/shops. Show cause notice was issued by the concerned jurisdictional authorities. That after adjudication, it was held that the appellants were not liable to pay the service tax on "market fee" or "mandi shulk" collected by them. However, the appellants were held liable for service tax under the category of "renting of immovable property" in respect of renting of land(s)/shop(s) for a consideration. Accordingly, the Service Tax demands were confirmed. Penalties under Ss. 76, 77 and 78 of the Finance Act, 1994 were also imposed on them. The appellants preferred appeals before the CESTAT.

(3.) Shri Prakul Khurana and Ms. Divyasha Mathur, learned counsel appearing on behalf of the respective appellants - respective Market Committees have vehemently submitted that as the activity of allotment of shops/premises/spaces to traders and brokers by the respective Market Committees for the purpose of storage and/or marketing of agricultural produce is in the nature of a statutory activity as mandated under Sec. 9 of the Act, 1961 and, therefore, the Market Committees are exempted from payment of service tax on such services as per Circular No.89/7/2006 dtd. 18/12/2006.