2010 (9) TMI 518 - AT - Service Tax

Penalty Under section 78 - As per the decision of the Tribunal in Institute of Banking Personnel Selection v. CST and the Tribunal s decision in Punjab Ex-Servicemen Corpn. v. CCE (2008 -TMI - 32396 - CESTAT, NEW DELHI), held that the existence of two different views decision of Tribunal in two cases itself justifies waiver of pre-deposit- Hence, dispense with pre-deposit of the amounts in dispute and stay recovery thereof pending the appeal.

Summary

Issues:
1. Whether the applicants were liable to pay service tax for rendering Business Auxiliary Services.
2. Whether the applicants, registered as a non-profit organization, were exempt from service tax under section 65(105)(zzb) of the Finance Act, 1994.
3. Whether the applicants made a strong prima facie case for waiver of pre-deposit based on their non-profit status and financial hardship.

Analysis:
1. The judgment revolves around the liability of the applicants to pay service tax for providing Business Auxiliary Services, including forming, training, linking, and monitoring Self Help Groups (SHGs) and recovering loans from ICICI Bank. The demand was confirmed under section 78 of the Finance Act, 1994. The applicants acknowledged providing the services but argued that as a non-profit organization registered under section 25 of the Companies Act, 1956, they were not a 'commercial concern' and thus not liable for service tax during the relevant period.

2. The Tribunal found that the applicants had a strong prima facie case for waiver of pre-deposit as they operated as a non-profit organization, not distributing profits or income to members. The Tribunal cited a previous decision in Institute of Banking Personnel Selection v. CST to support this view. Despite the Commissioner (Appeals) relying on a different case, Punjab Ex-Servicemen Corpn. v. CCE, the Tribunal emphasized the lack of consideration of the Institute of Banking Personnel Selection case and the existence of conflicting views, justifying the waiver of pre-deposit. Additionally, the applicants' limited balance in their savings account with ICICI Bank demonstrated potential extreme financial hardship if required to make a pre-deposit.

3. Ultimately, the Tribunal dispensed with the pre-deposit of the disputed amounts and stayed the recovery pending the appeal, considering the non-profit nature of the applicants, the conflicting views on their liability for service tax, and the financial hardship they would face if required to make the pre-deposit. This decision highlighted the importance of the applicants' non-profit status and financial circumstances in granting the waiver and stay of recovery, ensuring a fair and just outcome in the legal proceedings.