CESTAT Chandigarh Rules Adda Fees at Amritsar Bus Terminal Not Taxable as Business Support Services

February 04, 2026 : The Customs, Excise and Service Tax Appellate Tribunal, Chandigarh, has held that adda fees collected at the Amritsar bus terminal are not liable to service tax under the category of “Business Support Services” as defined in the Finance Act, 1994. The ruling was delivered by a bench comprising Judicial Member S. S. Garg and Technical Member P. Anjani Kumar, allowing six appeals filed by Rohan and Rajdeep Infrastructure Pvt. Ltd.

The Tribunal was examining service tax demands raised for the period from October 2006 to March 2015. The appellant had entered into a Build-Operate-Transfer concession agreement with the Punjab Infrastructure Development Board under the Punjab Infrastructure (Development & Regulation) Act, 2002, for the construction, operation, and maintenance of the Amritsar bus terminal. Under this arrangement, the company financed and built a new terminal at its own cost and was permitted to collect adda fees from bus operators during the concession period as a means of recovering its investment. Ownership of the terminal always remained with the State authority, with all assets to be transferred back at the end of the concession term.

The Department alleged that the adda fees constituted consideration for providing Business Support Services to bus operators, as the terminal facilities such as parking bays, ticket counters, and passenger amenities supported their commercial operations. Based on this premise, show cause notices were issued and service tax demands, along with interest and penalties, were confirmed by the adjudicating authorities.

Challenging these demands, the appellant argued that there was no contractual relationship with bus operators. The only agreement was with the State authority, and the adda fees were fixed and notified by the Government of Punjab. According to the appellant, the fees were not consideration for any service rendered to bus operators but were merely a recovery mechanism permitted by the State in lieu of payments for constructing and operating the terminal.

After examining the concession agreement and the statutory framework, the Tribunal accepted the appellant’s position. It noted that the agreement expressly allowed the collection of adda fees “in lieu of consideration payable by the authority for the construction and development of the project,” and that the appellant had no role in fixing or varying these charges. The bench further observed that the definition of Business Support Service is intended to cover services that are outsourced by a business entity. In the present case, it would be incorrect to suggest that bus operators had outsourced the construction or operation of the terminal to the appellant.

The Tribunal emphasized that service tax is a contract-based levy and that tax liability must be determined from the contract between the service provider and the service recipient. Here, the only contract was between the appellant and the State authority, with no privity of contract between the appellant and individual bus operators.

The bench also distinguished the earlier decision in Prem Kumar Maini, relied upon by the Department. It noted that in that case the operator was merely maintaining an existing bus terminal, whereas Rohan and Rajdeep Infrastructure had constructed an entirely new terminal under a BOT arrangement at its own cost and was required to transfer it back to the State after the concession period.

On the issue of limitation, the Tribunal found that the Department had been aware of the appellant’s activities and had received relevant disclosures. In the absence of any evidence of suppression, fraud, or wilful misstatement, a substantial portion of the demand was held to be time-barred.

In view of these findings, the Tribunal set aside the impugned orders and allowed all six appeals with consequential relief, holding that the service tax demand on adda fees under the category of Business Support Services was not sustainable in law.

Cause Title: Rohan and Rajdeep Infrastructure Pvt. Ltd. vs. Commissioner of Central Excise & Service Tax
Case No.: Service Tax Appeal No. 55340 of 2013 and connected appeals
Coram: S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member)
Date of Decision: 3 February 2026