Page 112 - GSTL_3rd September 2020_Vol 40_Part 1

46 GST LAW TIMES [ Vol. 40
and hence their activities cannot be considered as taxable service and no service
tax can be levied for these activities.
7.3 The issue whether the statutory authority performing statutory
functions as provided under a statute is liable to service tax or not has been con-
sidered and decided by catena of judgments rendered by various Courts. In the
case of Maharashtra Industrial Development Corporation (MIDC) cited supra, the
Hon’ble Bombay High Court has categorically held that no service tax could be
demanded on the charges collected by the MIDC, in terms of MID Act, 1961 to-
wards maintenance of industrial areas as the same is in the nature of statutory
function performed in terms of the statute. It is pertinent to quote the relevant
findings of the Bombay High Court, in paras 5, 6, 7 :-
5. We have given careful consideration to the submissions. Firstly, it will
be necessary to note what is set out in the circular dated 18th December,
2006 bearing No. 89/7/2006. Clauses 2 and 3 of the said circular read thus :
“2. The issue has been examined. The Board is of the view that
the activities performed by the sovereign/public authorities under the
provision of law are in the nature of statutory obligations which are to
be fulfilled in accordance with law. The fee collected by them for per-
forming such activities is in the nature of compulsory levy as per the
provisions of the relevant statute, and it is deposited into the Govern-
ment Treasury. Such activity is purely in public interest and it is under-
taken as mandatory and statutory function. These are not in the nature
of service to any particular individual for any consideration. Therefore,
such an activity performed by a sovereign/public authority under the
provisions of law does not constitute provision of Taxable Service to a
person and, therefore, no Service Tax is leviable on such activities.
3. However, if such authority performs a service, which is not
in the nature of statutory activity and the same is undertaken for a con-
sideration not in the nature of statutory fee/levy then in such cases, Ser-
vice Tax would be leviable, if the activity undertaken falls within the
ambit of a Taxable Service.”
(Underlines supplied)
6. Thus, the activities performed by sovereign or public authorities under
the provisions of law which are in the nature of statutory obligations are
covered by clause 2 which provides that the fee collected by such sovereign
or public authorities for performing such activities is in the nature of com-
pulsory levy. Only if such authority performs service which is not in the na-
ture of statutory activity and the same is undertaken for a consideration
which is not in the nature of statutory fee, Service Tax would be leviable if
the activity undertaken otherwise falls within the ambit of Taxable Service.
7. Going by the show cause notice, the allegation is that the Respondent -
MIDC has collected service charges from the plot owners/plot allotters in
consideration of having provided them various facilities including mainte-
nance, management and repairs of the facilities in the MIDC area. As stated
earlier, reliance is placed on clause (64) of Section 65 of the said Act. As
pointed out earlier, MIDC is already registered under the category of “rent-
ing of immovable property” and for services covered by such category;
MIDC is admittedly paying Service Tax.
7.4 Further we note that the functions of MIDC under MID Act, 1961 is
more or less identical with the functions of the appellant, KIADB under KIAD

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