Page 103 - GSTL_3rd September 2020_Vol 40_Part 1

2020 ] KARNATAKA INDUSTRIAL AREAS DEV. BOARD v. COMMR. OF CENTRAL TAX 37
opment of industrial area in a specified area within the State of Kar-
nataka;
(c) Based on the above, the scheme would be notified and the required
land would be acquired by the State in terms of the provisions of
the KIAD Act, 1966;
(d) The lands so acquired would be placed at disposal of the KIADB;
(e) KIADB would develop the industrial areas and allot the developed
areas to the applicants;
(f) KIADB is empowered by the KIAD Act, 1966 to undertake the fol-
lowing :
(i) To make available the building on lease or sale or lease cum
sale to industrialists
(ii) To construct buildings for housing of employees of the indus-
tries;
(iii) To allot residential tenements in industrial areas
(iv) As part of the Scheme, KIADB has the powers as mandated
under the KIAD Act, 1966 to construct and maintain the in-
dustrial areas and also provide amenities and common facili-
ties in the industrial area;
In order to support his submission, he relied upon the following decisions :-
(i) Narayanappa v. State of Karnataka [2006 (7) SCC 578]
(ii) Shri Ramtanu Housing Co-operative Society Ltd. v. State of Maharashtra
[1970 (3) SCC 323]
4.2 Learned Counsel referred to Entry 42 of the Concurrent List which
provides power to make laws for the purpose of acquisition or re-acquisition of
property. Further Entry 24 of the List II (State List) provides power to make laws
relating to industries. He also submitted that KIAD Act was enacted for the pur-
pose of acquisition of land and forming of industrial areas and the appellant is
engaged in the activity of a public purpose viz. development of industrial areas
within the State of Karnataka. Learned Counsel also took us through various sec-
tions of KIAD Act viz. Sections 5, 6, 11, 13, 14, 17, 18, 21, 28(8), 32 and 36 to but-
tress his argument that the appellant is a Government undertaking engaged in
performing the statutory functions and hence are not subject to levy of service
tax at all. He further submitted that the issue that no service tax could be levied
on the activities of industrial development boards is no longer res integra. He re-
lied upon the decision of the Bombay High Court in the case of CCE, Nashik v.
Maharashtra Industrial Development Corporation [2018 (9) G.S.T.L. 372 (Bom.)]
wherein the Bombay High Court has held that no service tax could be demanded
on the charges collected by Maharashtra Industrial Development Corporation in
terms of the Maharashtra Industrial Development Act, 1961 towards mainte-
nance of the industrial areas, as the same is in the nature of statutory functions
performed in terms of the statute. He further submitted that when the mainte-
nance of industrial area itself is held to be statutory function, the main function
of acquisition of land, development of such land into industrial area and allot-
ment of such land would certainly be a statutory function and does not attract
the levy of service tax. He also submitted that all other functions rendered by the
appellant being incidental, cannot be brought to tax.

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