2014 (5) TMI 463 - HC - Service Tax

Demand of service tax from Cooperative Society - principle of mutuality - Consultancy service - Held that - society is engaged for commercial activities, the fact remains that the respondent/ society is a Cooperative Society established by the M,P, Cooperative Societies Act and in the matter of consultancy being undertaken, it has been appointed as a nodal agency by the State Government. By administrating and managing the Milk Unions, the Appellant is only fulfilling its statutory responsibility and obligations towards its constitutent members. If any service is rendered in connection with the promotion and furtherance of its objects by the Appellant, the same would amount to rendering service to itself. Therefore, the Appellant can not be held to be a service provider and the Milk Unions service recipients. This finding was reconsidered by the Appellate Tribunal and the Appellate Tribunal has also affirmed the same mainly on the ground that the society is not conducting any commercial activities in the matter of consultancy service but only rendering consultancy service to various Milk Unions, i.e. the member societies which are functioning under its guidelines being Apex society and a nodal agency - Decided against Revenue.

Summary

Issues:
- Appeal by Revenue under Section 35-G of the Central Excise Act, 1944 regarding recovery of service tax from a Cooperative Society.
- Liability of the Cooperative Society to pay service tax for consultancy services provided to other Cooperative Societies.
- Interpretation of the role and activities of the Cooperative Society in relation to service tax liability.
- Analysis of the findings of the Commissioner (Appeals) and the Appellate Tribunal regarding service tax imposition on the Cooperative Society.

Issue 1: Appeal by Revenue under Section 35-G of the Central Excise Act, 1944
The judgment pertains to an appeal by the Revenue under Section 35-G of the Central Excise Act, 1944 challenging the orders passed by the Appellate Authority and the Appellate Tribunal concerning the recovery of service tax from a Cooperative Society. The respondent, a Cooperative Society involved in consultancy services for other Cooperative Societies, was issued a show cause notice for service tax assessment by the Additional Commissioner, Central Excise Department.

Issue 2: Liability of the Cooperative Society to pay service tax for consultancy services
The key issue revolves around determining the liability of the Cooperative Society to pay service tax for the consultancy services it provides. The society, registered under the M.P. Cooperative Societies Act, 1960, was appointed as a nodal agency by the State Government for consultancy services to ensure milk production in the state. The Commissioner (Appeals) and the Tribunal held that the society is not liable to pay service tax for these consultancy services, leading to the Revenue's appeal.

Issue 3: Interpretation of the role and activities of the Cooperative Society
The judgment delves into the interpretation of the role and activities of the Cooperative Society in relation to the service tax liability. Despite arguments emphasizing the commercial activities of the society, it was established that the society, being a Cooperative Society under the M.P. Cooperative Societies Act, primarily fulfills statutory responsibilities towards its member societies. The society's functions of supervision and management of Milk Unions were considered as part of its statutory obligations, leading to the conclusion that it cannot be classified as a service provider for service tax purposes.

Issue 4: Analysis of the findings of the Commissioner (Appeals) and the Tribunal
The findings of the Commissioner (Appeals) and the Appellate Tribunal were thoroughly analyzed in the judgment. Both authorities concurred that the society is not engaged in commercial activities regarding consultancy services but rather provides consultancy to member Milk Unions under its guidance as an Apex society and nodal agency. The judgment upheld the concurrent findings of the Commissioner (Appeals) and the Tribunal, dismissing the appeal by the Revenue as no error warranting reconsideration was found in the matter.

In conclusion, the judgment provides a detailed analysis of the issues surrounding the liability of a Cooperative Society to pay service tax for consultancy services, emphasizing the statutory responsibilities and non-commercial nature of the society's activities in determining the service tax imposition.