KRISHI UPAJ MANDI SAMITI, NEW MANDI YARD, ALWAR versus COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, ALWAR

Citation: [2022] 1 S.C.R. 700 · Decided: 23-02-2022 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Dismissed

Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 1 S.C.R.
[2022] 1 S.C.R. 700
700
KRISHI UPAJ MANDI SAMITI, NEW MANDI YARD, ALWAR
v.
COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX,
ALWAR
 (Civil Appeal No.1482 of 2018)
FEBRUARY 23, 2022
[M. R. SHAH AND B. V. NAGARATHNA, JJ.]
Rajasthan Agricultural Produce Markets Act, 1961: s.9(2) –
Liability of Market Committees to pay service tax on market fees
received for allotting/renting/leasing the shop/shed/platform/land
– Held: Exemption circular No.89/7/2006 dated 18.12.2006
provides that service tax is not leviable on activities performed by
the public authorities under the provisions of law which are
mandatory and statutory functions and the fee collected for
performing such activities is in the nature of a compulsory levy as
per the provisions of the relevant statutes and is deposited into the
Government Treasury – Under sub-section(2) of s.9, the word used
is “may”, therefore, the activities mentioned in s.9(2)(xvii) cannot
be said to be mandatory statutory duty and/or activity – Under s.9(2),
it is not a mandatory statutory duty cast upon the Market Committees
to allot/lease/rent the shop/platform/land/space to the traders – Even
the fees which is collected is not deposited into the Government
Treasury – It will go to the Market Committee Fund and will be used
by the Market Committee(s) – Such a fee collected cannot have the
characteristics of the statutory levy/statutory fee – Thus, activities
of allotting/renting/leasing of shop/shed/platform/land by Market
Committees to the traders is not a mandatory statutory duty cast
upon the Market Committees under s.9 of the Act and therefore,
Market Committees are not exempt from payment of service tax on
such activities.
Interpretation of Statutes: Exemption notification –
Construction of – Held: Not be liberally construed – Notification
has to be read as a whole – If any of the conditions laid down in the
notification is not fulfilled, the party is not entitled to the benefit of
that notification – Circular/Government Order/Notification.
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Interpretation of Statutes: Taxing statutes – Exception or
exempting provision – Construction of – Held: An exception and/or
an exempting provision in a taxing statute should be construed
strictly – It is not open to the court to ignore the conditions prescribed
in the relevant policy and the exemption notifications issued in that
regard – The statutory provisions providing for exemption have to
be interpreted in light of the words employed in them and there
cannot be any addition or subtraction from the statutory provisions.
Interpretation of Statutes: Taxing statutes – Interpretation of
– Strict interpretation – In a taxing statute, it is the plain language
of the provision that has to be preferred – Strict interpretation of
the provision is to be accorded to each case on hand – Purposive
interpretation can be given only when there is an ambiguity in the
statutory provision or it results in absurdity.
Interpretation of Statutes: Fiscal/Taxing statutes vis-a-vis
Exemption notification – Interpretation of – Held: In the event of
ambiguity in a provision in a fiscal statute, a construction favourable
to the assessee should be adopted – However, said principle shall
not be applicable to construction of an exemption notification, when
it is clear and not ambiguous – Thus, it will be for the assessee to
show that he comes within the purview of the notification – Eligibility
clause in relation to exemption notification must be given effect to
as per the language and not to expand its scope deviating from its
language – Thus, there is a vast difference and distinction between
a charging provision in a fiscal statute and an exemption
notification.
Dismissing the appeals, the Court
HELD: 1.1 As per the exemption circular “Circular No.
89/7/2006 dated 18.12.2006” no service tax is leviable on
activities which are performed by the sovereign/public authorities
under the provisions of law being mandatory and statutory
functions and the fee collected for performing such activities is
in the nature of a compulsory levy as per the provisions of the
relevant statute and is deposited into the Government Treasury.
In paragraph 3, it is also specifically clarified that if such authority
performs a service, which is not in the nature of a statutory activity
KRISHI UPAJ MANDI SAMITI, NEW MANDI YARD, ALWAR v. COMMISSIONER
OF CENTRAL EXCISE AND SERVICE TAX, ALWAR
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