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2014 (2) TMI 524 - Commissioner - Service TaxClassification of services - issuing Country of Origin Certificate - Extended period of limitation - Held that - services rendered by the appellants towards issuing Country of Origin Certificate are classifiable under Technical Inspection and Certification Services, whereas the present show cause notice and the impugned order have classified the activities of the appellants under the Club or Association Services - Demand set aside. Regarding Project income - services provided to United Nations Organization - exemption under notification 16/2002 ST - Held that - UNCTAD is not covered in the list of international organizations to whom certain privileges and immunities have been granted. - Demand confirmed. Extended period of limitation - Held that - under the self-assessment regime of tax liability, the appellants were under obligation to correctly classify the services rendered by them and to discharge their Service Tax liability correctly. - he appellants neither got themselves registered with Service Tax nor did they discharged their Service Tax liability at all. The act of non-observance of rules tantamount to contravention of the stipulation made under Service Tax law with intent to evade payment of Service Tax - demand confirmed invoking extended period of limitation.
Issues Involved:
1. Liability to pay Service Tax under the category of "Club or Association Services." 2. Classification of income from issuing Certificates of Origin. 3. Classification of Project Income received from UNCTAD. 4. Invocation of the extended period of limitation under Section 73(1) of the Finance Act, 1994. 5. Imposition of interest and penalties under Sections 77 and 78 of the Finance Act, 1994. Detailed Analysis: 1. Liability to Pay Service Tax under "Club or Association Services": The appellants argued that they are a non-profit organization engaged in public service for the benefit of society and not in providing any taxable services under the "Club or Association Services" category. They contended that their activities, including representing MSMEs and collecting subscriptions, do not fall under the taxable services defined in Section 65(105)(zzze) of the Finance Act, 1994. However, the adjudicating authority confirmed the demand of Service Tax amounting to Rs. 21,68,454/- on the grounds that the income received was for activities covered under the definition of "Club and Association Services," chargeable to Service Tax. The authority held that the appellants' activities were primarily to their members for a subscription or other amount, fulfilling the criteria for "Club or Association Services." 2. Classification of Income from Issuing Certificates of Origin: The appellants contended that the fee charged for issuing Certificates of Origin (COOC) is not covered under "Club or Association Services" but falls under "Technical Inspection and Certification Services," as clarified by C.B.E. & C. Circular No. 145/14/2011-S.T., dated 19-8-2011. The adjudicating authority agreed, holding that the services rendered for issuing COOC are classifiable under "Technical Inspection and Certification Services" and not "Club or Association Services." Therefore, the demand for Service Tax under the latter category was set aside. 3. Classification of Project Income from UNCTAD: The appellants argued that the project income received from UNCTAD for carrying out tasks under the SME component is exempt from Service Tax under Notification No. 16/2002-S.T., dated 2-8-2002, which exempts services provided to the United Nations or an International Organization. However, the adjudicating authority found that UNCTAD is not listed under the United Nations (Privileges and Immunities) Act, 1947, and thus, the exemption does not apply. The appellants were directed to submit the requisite data for the period 1-4-2008 onwards to calculate the Service Tax liability, which would be recoverable with interest and penalty under Section 78 of the Finance Act, 1994. 4. Invocation of Extended Period of Limitation: The appellants argued that the extended period of limitation under Section 73(1) of the Act should not be invoked as there was no fraud, collusion, wilful misstatement, or suppression of facts. They claimed a bona fide belief in their non-liability to Service Tax. The adjudicating authority, however, held that the appellants' failure to register and discharge Service Tax liability constituted a contravention of the law with intent to evade payment, justifying the invocation of the extended period. 5. Imposition of Interest and Penalties: The adjudicating authority upheld the imposition of interest and penalties under Sections 77 and 78 of the Finance Act, 1994. The appellants were found liable to pay a penalty equivalent to the amount of Service Tax calculated from 1-4-2008 onwards and a penalty of Rs. 1,000/- under Section 77. The authority noted that the appellants' failure to comply with Service Tax laws warranted these penalties. Conclusion: The appeal was disposed of with modifications. The demand for Service Tax under "Club or Association Services" was upheld for the period 1-4-2008 onwards, with interest and penalties. The demand for Service Tax on income from issuing COOC was set aside, as it falls under "Technical Inspection and Certification Services." The project income from UNCTAD was subject to Service Tax, as the exemption did not apply. The extended period of limitation was justified, and the imposition of interest and penalties was upheld. The appellants were directed to provide requisite data for accurate calculation of Service Tax liability.
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