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The apex court docket stated the exemption notification needs to be given that means in response to the legislative intendment and such statutory provisions need to be interpreted in gentle of the “phrases employed in them”.
The Supreme Courtroom Wednesday stated an exception or exempting provision in a taxing statute needs to be construed strictly and it isn’t open to the court docket to disregard the circumstances prescribed within the coverage and notifications issued in that regard.
The apex court docket stated the exemption notification needs to be given that means in response to the legislative intendment and such statutory provisions need to be interpreted in gentle of the “phrases employed in them”.
A bench of Justices M R Shah and B V Nagarathna dismissed a batch of appeals arising out of the judgement handed by the principal bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), New Delhi.
The CESTAT had stated that the appellants, ‘Krishi Upaj Mandi Samiti’ (Agricultural Produce Market Committees) situated in numerous components of Rajasthan, have been liable to pay service tax below the class of “renting of immovable property service” for the interval as much as June 30, 2012.
In its 18-page judgement, the apex court docket famous that as per the legislation laid down by the highest court docket, in a taxing statute, it’s the plain language of provision that must be most popular, the place the language is apparent and is able to figuring out an outlined that means.
“An exception and/or an exempting provision in a taxing statute needs to be construed strictly and it isn’t open to the court docket to disregard the circumstances prescribed within the related coverage and the exemption notifications issued in that regard,” the bench stated.
“The exemption notification needs to be strictly construed and given that means in response to legislative intendment. The statutory provisions offering for exemption need to be interpreted in gentle of the phrases employed in them and there can’t be any addition or subtraction from the statutory provisions,” it famous.
The highest court docket famous that appellants earlier than it, that’s ‘Krishi Upaj Mandi Samiti’ situated in numerous components of Rajasthan, is established below the provisions of the Rajasthan Agricultural Produce Markets Act, 1961.
It famous that Samiti regulates the sale of agricultural produce within the notified markets they usually cost a “market price” for issuing the license to merchants, brokers, manufacturing facility/storage, firm, or different consumers of different agricultural produce.
The appellants additionally lease out land and retailers to merchants and accumulate the allotment price or lease quantity for it.
The bench famous that the involved income division was of the view that appellants are liable to pay service tax on the providers rendered by them by renting or leasing the lands and retailers and present trigger discover was issued by the involved jurisdictional authorities.
After adjudication, it was held that the appellants weren’t liable to pay service tax on “market price” or “mandi shulk” collected by them.
Nonetheless, they have been held responsible for service tax below the class of “renting of immovable property” in respect of renting of land or retailers.
The service tax calls for have been confirmed and later, the appellants most popular appeals earlier than the CESTAT In the course of the arguments earlier than the apex court docket, the counsel showing for the appellants, had stated because the exercise of allotment of outlets or area to merchants and brokers by market committees for the aim of storage or advertising of agricultural produce is within the nature of a statutory exercise as mandated below part 9 of the 1961 Act, they’re exempted from cost of service tax on such providers as per a round of December 18, 2006.
The bench famous that the appellants are claiming exemption below 2006 round.
“As per the exemption round solely such actions carried out by the sovereign/public authorities below the provisions of legislation being obligatory and statutory capabilities and the price collected for performing such actions is within the nature of a obligatory levy as per the provisions of the related statute and it’s deposited into the federal government treasury, no service tax is leviable on such actions,” it stated.
The apex court docket stated the exemption notification shouldn’t be liberally construed and the beneficiary should fall inside the ambit of the exemption and fulfill the circumstances thereof.
The bench famous that on and after July 1, 2012, such exercise carried out by the agricultural produce market committees is positioned within the detrimental listing.
“The truth that, on and after July 1, 2012, such exercise by the market committees is put within the detrimental listing, it will possibly safely be stated that below the 2006 round, the market committees weren’t exempted from cost of service tax on such actions,” it stated.
“In view of the above and for the explanations said above, all these appeals fail and the identical deserves to be dismissed and are accordingly dismissed,” the bench stated.
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