2026-VIL-1502-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax on adda-fee collected by management contractor - Appellant was engaged as management contractor for operation and maintenance of bus terminals by Government of Punjab under concession arrangement - Appellant collected adda-fee from bus operators at statutory rates fixed by Government - SCN proposed demand of service tax under Business Support Services - Whether collection of adda-fee under State concession agreement without direct contractual relationship with bus operators constitutes BSS - HELD - Service tax is a contract-based levy and presupposes existence of service provider service recipient and contractual nexus between them. The relevant decision of Tribunal in case of Rohan and Rajdeep Infrastructure Pvt. Ltd. is squarely applicable. In that case it was held that collection of adda-fee under State concession agreement in absence of direct contractual relationship with bus operators does not constitute Business Support Service - It is admitted fact that Appellant has contract with State of Punjab and no contract exists with individual bus operators. At time of entering into contract with State of Punjab Appellant could not have agreed to provide support services to unknown bus operators. Bus terminals are created as public utility service and not as support services for bus operators. The adda-fees are collected as per Government mandate as statutory levy and not as privately negotiated commercial consideration. The essential ingredients of BSS i.e. contractual relationship between service provider and recipient and specific agreement to render support service are absent. The services if at all rendered are to State of Punjab and not to bus operators - Demand for service tax under BSS is set aside and the appeal is allowed
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