Justice C Saravanan, allowing the plea moved by the Virudhachalam and Cuddalore municipalities, in his order observed, “ … that the petitioner (municipalities) was renting out stops in the bus stand and other areas where it was having immovable properties, explains that the expression ‘any other person’ can only mean any other person other than the owner of the property.

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Services of civic bodies not taxable, rules High Court
Therefore, owner of the immovable property is not liable to pay tax under Section 66 of the Finance Act, 1994 for the period up to June 30, 2012.

Published: 14th April 2021 05:27 AM | Last Updated: 14th April 2021 05:27 AM | A+A A-
Madras High Court Madras High Court (File photo | EPS) By Express News Service
CHENNAI: Services provided by sovereign bodies like municipalities are not taxable, the Madras High Court has ordered, and quashed notices issued by the GST and Central Excise department against two such civic bodies. The issue pertains to Virudhachalam and Cuddalore municipalities moving pleas seeking to quash the demand notices of the GST and Central Excise department over levying service tax on the services provided by the civic bodies in public spaces.

The State government challenged the notices on the grounds that municipalities are not a ‘person’ within the definition of the Finance Act, 1994 as it stood before 2012 for which the service tax was levied. It, therefore, submitted that the question of levying tax on services provided by the respective municipalities cannot be taxed under the provisions of the Act.

The Goods & Services Tax and Central Excise department contended that for the period before 2012, even if there was no definition for the word ‘person’, its definition in the General Clauses Act would apply and therefore, the petitioners are liable to pay tax.

Justice C Saravanan, allowing the plea moved by the Virudhachalam and Cuddalore municipalities, in his order observed, “ … that the petitioner (municipalities) was renting out stops in the bus stand and other areas where it was having immovable properties, explains that the expression ‘any other person’ can only mean any other person other than the owner of the property.

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Therefore, owner of the immovable property is not liable to pay tax under Section 66 of the Finance Act, 1994 for the period up to June 30, 2012.” Emphasising that the interpretation given to ‘any other person’ in the present case has large scale ramifications, the court clarified that the expression ‘any other person’ qua Section 65 (105) cannot be uniformly applied to other provisions of the Finance Act,1994 unless they are examined separately and individually on a case-by-case basis.

Further, the High Court judge held that such services mentioned are provided by a government or local authority and they are exempted under Section 65D (1)(a) of the Finance Act,1994 as amended and as in force from July 2012.[4/14, 08:57] Sekarreporter1: W.P.No.8900 of 2018 and batch
07.03.2018 in C.No.V/ST/15/2/2018-ST.Adjn. and quash the same as
arbitrary and illegal.
For Petitioner : Mr.Joseph Prabakar
For Respondent : M/s.R.Hemalath, Senior Standing Counsel
W.P.No. 31799 of 2017
Cuddalore Municipality,
Represented by Commissioner
Mr.P.N.Mujibur Rahumaan,
Bharathi Road,
Cuddalore – 607 001. … Petitioner
Vs.
The Assistant Commissioner of Central Excise
& Service Tax,
Office of the Superintendent of Central Excise,
No.1, Vallalar Nagar, Manjakuppam,
Cuddalore – 607 001. … Respondent
Writ Petition filed under Article 226 of the Constitution of India, to
issue a Writ of Certiorari, to call for the records on the file of the
respondent in proceedings in Order-in-Original No.03/2017-ST dated
24.03.2017-ST in C.No.IV/09/04/2017-ST.Adjn. (RO OC No.100/2016)[4/14, 08:57] Sekarreporter1: W.P.No.8900 of 2018 and batch
07.03.2018 in C.No.V/ST/15/2/2018-ST.Adjn. and quash the same as
arbitrary and illegal.
For Petitioner : Mr.Joseph Prabakar
For Respondent : M/s.R.Hemalath, Senior Standing Counsel
W.P.No. 31799 of 2017
Cuddalore Municipality,
Represented by Commissioner
Mr.P.N.Mujibur Rahumaan,
Bharathi Road,
Cuddalore – 607 001. … Petitioner
Vs.
The Assistant Commissioner of Central Excise
& Service Tax,
Office of the Superintendent of Central Excise,
No.1, Vallalar Nagar, Manjakuppam,
Cuddalore – 607 001. … Respondent
Writ Petition filed under Article 226 of the Constitution of India, to
issue a Writ of Certiorari, to call for the records on the file of the
respondent in proceedings in Order-in-Original No.03/2017-ST dated
24.03.2017-ST in C.No.IV/09/04/2017-ST.Adjn. (RO OC No.100/2016)
and quash the same.
For Petitioner : Mr.Joseph Prabakar
For Respondent : Mr.A.P.Srinivas, Senior Standing Counsel
______________
Page No 2 of 41
http://www.judis.nic.in
[4/14, 08:58] Sekarreporter1: https://www.newindianexpress.com/cities/chennai/2021/apr/14/services-of-civic-bodies-not-taxable-rules-high-court-2289723.html
and quash the same.
For Petitioner : Mr.Joseph Prabakar
For Respondent : Mr.A.P.Srinivas, Senior Standing Counsel
______________
Page No 2 of 41
http://www.judis.nic.in
[4/14, 08:58] Sekarreporter1: https://www.newindianexpress.com/cities/chennai/2021/apr/14/services-of-civic-bodies-not-taxable-rules-high-court-2289723.html