2011 (9) TMI 825 - AT - Service Tax

Waiver of pre-deposit -major portion was demanded under the head Club or Association Service , minor parts of the demand having been raised under the heads, Business Support Service , Business Auxiliary Service Held that - Counsel for the appellant fairly comes forward with an offer to predeposit a further amount of Rs. 50 lakhs for the purpose of Section 35F of the Central Excise Act. waiver of pre-deposit allowed and stay

Summary

Issues:
- Waiver of pre-deposit and stay of recovery in respect of service tax, education cess, interest, and penalties for the period from 16.8.2002 to 31.3.2009.
- Applicability of service tax on entrance fee collected by the club from non-members.
- Acceptance of the appellant's offer to pre-deposit a further amount of Rs. 50 lakhs.

Analysis:

1. Waiver of Pre-deposit and Stay of Recovery:
The appellant sought waiver of pre-deposit and stay of recovery concerning service tax, education cess, interest, and penalties for the specified period. The total amount demanded was Rs.3,67,82,720, primarily under the head "Club or Association Service," with minor portions under other heads. The appellant had already made significant deposits towards the demand. The Tribunal, after considering submissions, found no grounds for full waiver. However, the appellant offered to pre-deposit an additional Rs. 50 lakhs, which was accepted by the Tribunal. Compliance was directed within eight weeks, with waiver of pre-deposit and stay of recovery for penalties, interest, and the remaining amount upon due compliance.

2. Applicability of Service Tax on Entrance Fee:
The appellant argued that a major part of the demand under the head 'Club or Association Service' pertained to entrance fees collected from individuals not yet club members. The appellant contended that these fees should not be subject to service tax as the recipients were not club members when the amounts were collected. The Tribunal accepted this argument and directed the appellant to pre-deposit Rs. 50 lakhs within eight weeks, considering the nature of the entrance fee collections.

3. Acceptance of Additional Pre-deposit:
Despite finding no compelling grounds for full waiver of pre-deposit, the Tribunal accepted the appellant's offer to pre-deposit Rs. 50 lakhs. This decision was influenced by the argument regarding the nature of the impugned demand related to entrance fees. The Tribunal directed compliance within a specified timeframe, with the assurance of waiver of pre-deposit and stay of recovery for certain components upon due compliance.

In conclusion, the Tribunal partially granted the appellant's request for waiver of pre-deposit and stay of recovery, accepting the additional pre-deposit offer of Rs. 50 lakhs. The decision was based on the specific circumstances of the case, particularly concerning the nature of the impugned demand related to entrance fees collected by the club from non-members.