2013 (7) TMI 123 - AT - Service Tax

Pre-deposit of service tax club and association service - Assessee main contention is that they are engaged in public service and are not a profit making organization - they have not collected any Service Tax from their Members - Held that - Service Tax confirmed against the applicant on the ground that they are engaged in providing services falling under the category of club or association services - the fact that they are not making any profit will not take them out of said definition - the issue involved are arguable and contentious - full dispensation of pre-deposit could not be allowed - one third deposit was ordered - stay granted partly.

Summary

Issues:
1. Dispensing with the condition of pre-deposit of Service Tax and penalties.
2. Classification of services provided by the appellant.
3. Applicability of the definition of club and association services.
4. Limitation period for the demand of Service Tax.
5. Requirement of pre-deposit for hearing the appeal.

Analysis:
The judgment dealt with the application seeking the dispensation of the pre-deposit condition of Service Tax and penalties amounting to Rs.2,78,01,252 imposed under various sections of the Finance Act, 1994. The appellant, registered under the Societies Registration Act, 1860, argued that they are engaged in public service as a platform for interaction between exporters and policy makers, promoting Indian exporting efforts globally. They contended that being a charitable organization registered with the Income Tax department, they are not profit-oriented and should not be classified under club or association services. The appellant also raised the issue of limitation regarding the demand confirmed for a specific period.

The Revenue's stance was that the appellant's activities fell under the definition of club and association services, regardless of their non-profit status. The Tribunal considered additional submissions and a stay order in a similar case, where a partial deposit was required for hearing the appeal. The Tribunal found the issues raised by the appellant to be arguable and contentious, deciding not to fully dispense with the pre-deposit condition. Instead, they directed the appellant to deposit Rs.50 lakh within 8 weeks, subject to which the remaining Service Tax and penalties would be waived, following precedents and considering the limitation period. Compliance was to be reported by a specified date.

In conclusion, the judgment balanced the interests of the appellant and the Revenue, requiring a partial pre-deposit for hearing the appeal while waiving the remaining amounts, taking into account the nature of services provided, the organization's structure, and the legal precedents in similar cases.