2014 (10) TMI 929 - Commission - Service Tax

Taxability - Club s or Association s Membership Services - Supply of Tangible Goods Service - Business Auxiliary Services - Renting of immovable property - maintainability of application - Held that - recent amendments of Section 32E(1)(a) brought out in the Finance Act 2014 pursuant to which the Bench records that the circumstances under which they filed the returns with late fee is accepted as compliance of Section 32E(1)(a) of CEA 1944 and therefore allows the application to be proceeded with for settlement. Club s or Association s Membership Services - donation was collected prior to the donors becoming members of the Sangam or even thereafter. However this donation was voluntary and not mandatory or compulsory for either to become the member of the Sangam or to avail the services provided by Sangam - Held that - the donation collected during the impugned period was not liable for Service Tax and therefore the Service Tax amount of 39, 20, 973/- demanded in the SCN on account of donations collected does not survive. The Bench however holds that the donation of 5/- collected for allowing the entry of vehicles to pick-up cement loads and subscription collected from members are liable for Service Tax. Supply of Tangible Goods Service - Held that - the nature of activity involved in transportation of petroleum products from the oil companies to the respective destinations by the applicant in their tanker trucks gets covered within the scope of GTA service also gets support from the fact that the same has been accepted by the respective Jurisdictional authority and assessed to Service Tax on IOCL and they complied with payment of the Service Tax under Reverse Charge Mechanism and filed periodic ST-3 returns. Moreover if the Service Tax on the Supply of Tangible Goods Service is paid the same would be available as CENVAT Credit for payment of Service Tax on GTA service thereby making the exercise revenue neutral - the entire Service Tax of 20, 77, 448/- demanded on this activity in the impugned Show Cause Notice is in-fructuous and not sustainable in law. Business Auxiliary Services - Held that - the applicant is liable to pay Service Tax under the category BAS as reworked in respect of IRCTC commission cell prepaid commission railway booking commission and incentives for petrol card sales. The other receipts namely turnover discount dealer commission reimbursement of expenses by IOC etc. are not liable for Service Tax as the same is related to their trading activities. Renting of immovable property - Held that - the applicant has received rental from immovable property of 9, 45, 000/- for the year 2008-09 10, 80, 000/- for the year 2009-10 16, 98, 750/- for the year 2010-11 and 23, 16, 950/- for the year 2011-12 - the applicant is liable to pay Service Tax on the value by adding with such value of other such taxable service by allowing the threshold exemption limit - the demand of 4, 18, 405/- on the rental value of the vacant land is unsustainable in law and is set aside. The interest payable should be worked out by the applicant to the satisfaction of the jurisdictional Commissioner. The Bench imposes a penalty of 50, 000/- on the applicant under the provisions invoked in the show cause notice and grants immunity in excess of the penalty indicated herein. The applicant is granted immunity from prosecution under Section 32K of Central Excise Act 1944 as made applicable to Service Tax vide Section 83 of the Finance Act 1994. Application disposed off.

Issues Involved:
1. Club's or Association's Membership Service
2. Supply of Tangible Goods Service
3. Business Auxiliary Service
4. Renting of Immovable Property Service
5. Quantification of Tax Liability
6. Applicant's Disclosure
7. Jurisdictional Commissioner's Report
8. Maintainability of the Application
9. Penalty and Prosecution

Issue-wise Detailed Analysis:

1. Club's or Association's Membership Service:
The applicant collected subscription amounts, donations, and entrance fees from members. According to Section 65(105)(zzze) of the Finance Act, 1994, any amount collected from members is taxable under this category. The applicant argued that donations and entrance fees are not taxable as they are not considerations for services rendered. The Commission found that donations collected were not related to availing services and thus not taxable. However, the subscription and entry fees were deemed taxable.

2. Supply of Tangible Goods Service:
The applicant provided transport vehicles to IOCL on a hire charge basis. The Revenue classified this as 'Supply of Tangible Goods Service' based on the financial records. The applicant argued that the service provided was GTA (Goods Transport Agency) service, not supply of tangible goods. The Commission accepted the applicant's argument, noting that IOCL paid service tax under reverse charge mechanism, and the activity was covered under GTA service.

3. Business Auxiliary Service:
The applicant received commissions for promoting sales of goods, which were categorized under 'Business Auxiliary Service' by the Revenue. The applicant admitted liability for certain commissions but disputed others, claiming they were related to trading activities. The Commission held that commissions from IRCTC bookings, petrol card sales, and similar activities were taxable, while turnover discounts and dealer commissions were not.

4. Renting of Immovable Property Service:
The applicant rented land and buildings to IOCL and TVS, which was taxable under this category. The applicant claimed exemption for renting vacant land prior to 30-6-2010. The Commission accepted this claim, noting that the exemption was valid, and settled the tax liability accordingly.

5. Quantification of Tax Liability:
The total service tax liability from April 2007 to March 2012 was determined to be Rs. 1,11,60,860/-. The applicant admitted a liability of Rs. 4,77,807/- and paid it along with interest. The Commission recalculated the tax liability, considering various exemptions and settled the final amount at Rs. 8,77,116/-.

6. Applicant's Disclosure:
The applicant disclosed their service tax liability and admitted partial liability. They filed belated returns with late fees and claimed ignorance of the service tax laws. The Commission accepted their compliance with Section 32E(1)(a) of the Central Excise Act, 1944.

7. Jurisdictional Commissioner's Report:
The Commissioner disputed the applicant's claims, asserting that donations, entrance fees, and various commissions were taxable. The Commissioner also questioned the classification of services and the eligibility for threshold exemptions.

8. Maintainability of the Application:
The Commission found the application maintainable, noting that the applicant had complied with the requirements by filing belated returns with late fees.

9. Penalty and Prosecution:
The Commission acknowledged the applicant's cooperation and partial disclosure. It imposed a penalty of Rs. 50,000/- and granted immunity from prosecution, considering the applicant's efforts to rebut the demand and their compliance.

Order:
The Commission settled the service tax liability at Rs. 8,77,116/-, with the applicant having already paid Rs. 4,77,808/-. The balance amount of Rs. 3,99,308/- along with applicable interest must be paid within 30 days. A penalty of Rs. 50,000/- was imposed, and immunity from prosecution was granted. The jurisdictional Commissioner was directed to verify the accuracy of the service tax admitted and settled.

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