2015 (3) TMI 700 - AT - Service Tax

Waiver of pre deposit - Whether the services provided to the Member by the cooperative society registered under the Karnataka Cooperative Societies Act 1959 is liable to tax under Banking and other Financial Services or not - Held that - Only a charitable trust or other organization which is established for not making profit can be considered as a non-commercial concern and in this case, the society obviously undertakes banking activity for making profit for the members. As regards Madhav Nagrik Sahkari Bank Ltd., (2012 (3) TMI 283 - CESTAT, NEW DELHI) the decision was rendered when commercial concern were not part of the definition. Therefore that decision is not applicable. Similarly, Punjab Ex-servicemen Corporation is not a cooperative society and it has not been stated so. Therefore, it may not be appropriate to apply this decision to the present case. In the result, we are left with a decision of the Tribunal wherein this Tribunal had taken a view that cooperative society is not a commercial concern in the case of ex-services security cooperative society Ltd. This decision is squarely applicable to the facts of this case. In this case, the appeal itself had been allowed. In any case for prima facie waiver of predeposit and stay against recovery, in our opinion this decision can be taken into account. - wherever service tax has not been paid or partly paid, the appellant shall deposit the amount payable towards tax liability within eight weeks and report compliance on 2.12.2014. Subject to compliance with the above requirement, the requirement of predeposit of balance dues is waived and stay against recovery is granted during the pendency of appeals. - Partial stay granted.

Summary

Issues involved: Whether services provided by a cooperative society to its members are liable to tax under Banking and other Financial Services.

Analysis:
1. The issue in all the appeals pertains to the tax liability of services provided by different branches of the same cooperative society to its members under the Karnataka Cooperative Societies Act 1959.

2. The appellant argued that post the amendment in the definition of banking and financial services from 01.06.2007, tax is attracted only when services are provided to a commercial concern. They contended that a cooperative society should not be considered a commercial concern, citing relevant case laws to support their stance. The appellant also highlighted that they have deposited the entire tax amount in most cases, requesting a stay on further tax payments.

3. The department, represented by three authorized representatives, argued that a cooperative society should be considered a commercial concern. They pointed out that even organizations with commercial motives can be registered under the cooperative societies act. The department emphasized that the society's objective is to benefit its members economically and distribute dividends, countering the appellant's claims regarding reimbursable expenses.

4. The Tribunal deliberated on whether a cooperative society should be deemed a commercial concern. The Commissioner viewed that societies engaged in banking activities for profit-making should be considered commercial concerns. The Tribunal differentiated previous case laws cited by both parties, ultimately relying on a precedent where a cooperative society was not deemed a commercial concern, allowing the appeal and granting a waiver on predeposit and stay against recovery.

5. The Tribunal acknowledged the appellant's argument on mutual interest but deferred detailed examination for the final hearing. Considering that the appellants had paid the service tax in most cases, the Tribunal directed all appellants to ensure payment of the demanded service tax. Waivers were granted on interest liability and late fees where not fully paid.

6. Consequently, the Tribunal ordered the appellants to deposit the tax liability amount within eight weeks and report compliance by a specified date. Upon compliance, the predeposit of remaining dues was waived, and a stay against recovery was granted for the duration of the appeals.