2013 (12) TMI 1429 - AT - Service Tax

Demand of service tax - Receipt of parchee fees - Classification under business auxiliary service - Parchee fees collected from the members engaged in transport business - Held that - From the scheme and object of the law notified in Gazette aforesaid, it is difficult to construe the appellant to be commercial concern acting in a commercial manner . The very object of Section 15 of the Act aforesaid was to provide welfare measure without acting as a commercial concern. Accordingly, it is not practicable to direct the appellant to suffer service tax for the impugned period under adjudication for which appeal is allowed - Decided in favour of assessee.

Summary

Issues: Taxability of parchee fees under 'business auxiliary service' for a corporation under a specific enactment.

In this case, the issue revolved around the taxability of parchee fees collected by a corporation under the Himachal Pradesh Ex-Servicemen Corporation Act, 1979. The Revenue argued that the fees were rightly taxed under the entry 'business auxiliary service.' The Commissioner (Appeals) had found that the corporation, set up to promote transport business approved by the State Government, collected parchee fees from members engaged in transport business and brought them under the taxable entry of business auxiliary service. The Gazette Notification indicated that the corporation was recognized as an Ex-servicemen Organization, aiming at the welfare and economic upliftment of ex-servicemen in Himachal Pradesh. The taxing entry during the relevant period (July 2003 to February 2006) was considered, focusing on the parchee aspect only.

The Tribunal analyzed the legislative intent and the object of the Himachal Pradesh Ex-Servicemen Corporation Act, 1979, to determine the nature of the corporation. The taxing entry prior to 2006 targeted commercial concerns for taxation, later broadening to include 'any person' from May 1, 2006. Considering the corporation's objectives outlined in Section 15 of the Act, aimed at welfare measures without a commercial motive, the Tribunal found it challenging to categorize the corporation as a commercial concern acting in a 'commercial manner.' Consequently, the Tribunal concluded that it was impractical to subject the appellant to service tax for the disputed period under adjudication, leading to the allowance of the appeal.

Therefore, the judgment delved into the specific provisions of the Himachal Pradesh Ex-Servicemen Corporation Act, 1979, the nature of the corporation's activities, the evolution of taxing entries, and the legislative intent to determine the taxability of parchee fees under 'business auxiliary service' for the corporation in question. The decision hinged on interpreting the corporation's role and objectives within the statutory framework to ascertain its liability for service tax during the relevant period.