2011 (3) TMI 618 - AT - Service Tax

Demand - stay - appellant is a non-profit organisation registered under Bombay Public Trust Act and is engaged in providing service of health club/sports activities to its members - it is a non-profit organization and certificate has been issued by Assistant Charity Commissioner and therefore it has to be treated as a charitable trust - service provided by a club or association cannot be separated from the members and therefore they have to be treated as one and the same and therefore it cannot be said that there are two parties - appellant is covered by the definition of club or association and the activities also are covered by taxable service - No evidence showing acute financial difficulty has been placed before us - Decided against the assessee by way of direction to deposit Rs. 10 Lakhs

Summary

Issues: Demand for service tax against a non-profit organization providing health club/sports activities. Whether services provided are chargeable and fall under taxable services definition. Whether the appellant qualifies as a charitable trust exempt from service tax.

Analysis:
1. Taxable Service Definition: The appellant, a non-profit organization providing health club and sports activities, contested that they should be treated as a charitable trust exempt from service tax. However, the tribunal found that the services offered, including organizing cricket matches, renting grounds, and hosting events, do not qualify as non-chargeable services. The definition of taxable service under Section 65(25)(a) includes any person or body providing services to its members for a subscription. The tribunal noted that the appellant falls under the definition of a club or association providing taxable services.

2. Precedent Decisions: The appellant argued that previous decisions supported their claim that services provided by a club or association to its members should not be considered taxable. However, the tribunal observed that the cited decisions were related to stay applications and did not establish a strong prima facie case in favor of the appellant. The tribunal emphasized that the services provided by the appellant clearly fell within the definition of taxable services, as per Section 65(25)(a), and could not be considered non-chargeable based on the nature of the activities.

3. Financial Difficulty and Deposit Requirement: The tribunal considered the appellant's financial situation and the balance of convenience. No evidence of acute financial difficulty was presented by the appellant. Therefore, the tribunal directed the appellant to deposit a specific amount within a specified timeframe and report compliance. Upon the deposit of the mentioned amount, the requirement of pre-deposit for the remaining dues was waived, and a stay against the recovery of the same was granted. This decision was made to ensure the balance of convenience and compliance with the tax obligations.

In conclusion, the appellate tribunal upheld the demand for service tax against the non-profit organization providing health club/sports activities, ruling that the services offered fell under the definition of taxable services. The tribunal directed the appellant to make a specific deposit while granting a stay against the recovery of the remaining dues, considering the balance of convenience and compliance requirements.