Page 120 - GSTL_3rd September 2020_Vol 40_Part 1

54 GST LAW TIMES [ Vol. 40
consideration not in the nature of statutory fee/levy, then in such
cases, service tax would be leviable, if the activity undertaken falls
within the ambit of a taxable service.”
5. Reading of the above Circular shows that it has been clarified
by the C.B.E. & C. that activities performed by sovereign/public au-
thorities under the provisions of law are in the nature of statutory
obligations which are fulfilled in accordance with law, as the func-
tions, according to the Board, are mandatory and statutory func-
tions and are not in the nature of service to any particular individu-
al for any consideration. On this basis, it is clarified that such activi-
ties performed under the provisions of law do not constitute taxable
service and that no Service Tax is leviable on such activities.
6. As we have already seen, the respondent department is provid-
ing personal insurance and group insurance in pursuance of the
statutory mandate as contained in Rules 22A and 22B of Part-I KSR.
In other words, the insurance provided is a mandatory statutory
function discharged by a State Government Department. Such an
activity is not a taxable service for the purpose of Service Tax in the
light of the Circular issued by the Central Board of Customs and
Excise referred to above. This, therefore, means that the view taken
by the Learned Single Judge does not merit interference”.
16. The Hon’ble Supreme Court in Calcutta Municipal Corporation v. Shrey
Mercantile (P) Ltd. reported in (2005) 4 SCC 245 examined the meaning and
scope of terms “Fee” and “tax”. It was held that :-
“14. According to Words and Phrases, Permanent Edn., Vol. 41,
p. 230, a charge or fee, if levied for the purpose of raising revenue under
the taxing power is a “tax”. Similarly, imposition of fees for the primary
purpose of “regulation and control” may be classified as fees as it is in
the exercise of “police power”, but if revenue is the primary purpose
and regulation is merely incidental, then the imposition is a “tax”. A tax
is an enforced contribution expected pursuant to a legislative authority
for the purpose of raising revenue to be used for public or governmental
purposes and not as payment for a special privilege or service rendered
by a public officer, in which case it is a “fee”. Generally speaking, “tax-
es” are burdens of a pecuniary nature imposed for defraying the cost of
governmental functions, whereas charges are “fees” where they are im-
posed upon a person to defray the cost of particular services rendered to
his account”.
The fee and other charges collected by the appellant from the employers in
the present dispute are fixed by the law with no discretion or option vested
with appellant or the employers. As such these cannot be considered as
amounts received for providing any taxable service of BOFS.
17. One more aspect can be examined to decide the tax liability of the ap-
pellant. For levy of service tax on any transaction, there should be a service
provider and a service recipient, apart from identifying a transaction under
a specific taxable category. In the present case, the appellant is identified as
a service provider. However, the Original Authority did not specifically
identify the service recipient. The employers are the only persons who pay
the consideration, now sought to be taxed, at the hand of appellants. We
have to examine what type of services the employers received from the ap-
pellant. On close scrutiny, it is plain and clear that they are not in receipt of
any service, least of all BOFS, from the appellant. The Original Authority
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