2015 (7) TMI 1042 - AT - Service Tax

Levy of penalty Renting of Immovable Property Service - Demand of service tax - Club or Association Service - Held that - Demand of Service Tax on Club or Association Service is not sustainable in view of the decision of Hon ble Gujarat High Court. The demand of tax on the other issues, the Appellants are not contesting the demand of tax, as they have already paid. Considering the facts and circumstances of the case, and the amount involved, we find that the tax on Renting of Immovable Property Service was imposed on the basis of retrospective amendment. Hon ble Delhi High Court struck down the levy, which was retrospectively amended by the notification. Taking into consideration overall facts and circumstances of the case and as the Appellant already paid the tax, we find that it is appropriate to waive the imposition of penalties. - demand of Service Tax on Club or Association Service alongwith interest and penalty is set aside. The demand of Service Tax alongwith interest in respect of the other services are upheld and penalties are set aside - Decided in favour of assessee.

Summary

Issues:
- Demand of Service Tax on various services provided by a Co-operative Society
- Applicability of penalties under the Finance Act, 1994
- Sustainability of demand of tax on specific services
- Competency of Central Government in imposing Service Tax
- Limitation period for demanding Service Tax
- Imposition of penalties on the Appellant

Analysis:

1. The Appellate Tribunal CESTAT Ahmedabad addressed the issue of a Co-operative Society facing a demand of Service Tax amounting to Rs. 48,55,594.00 for providing services to its members. The Adjudicating authority confirmed the demand along with interest and penalties under the Finance Act, 1994. The services included Club or Association Services, Sale of space for advertisement, Mandap Keeper services, and Renting of immovable property services.

2. The Appellant contended that they had already paid a portion of the Service Tax, and challenged the demand of tax on specific services. They argued that the demand of tax under 'Club or Association Services' was unsustainable based on a decision of the Gujarat High Court. Additionally, they claimed that the demand on 'Sale of space for Advertisement' exceeded the Central Government's powers, and the demand on 'Renting of Immovable Property Services' was partly time-barred. The Appellant had paid tax on some services and did not contest those demands.

3. The Authorised Representative for the Revenue supported the findings of the Commissioner (Appeals), asserting the Appellant's liability to pay tax on the remaining issues and advocating for the imposition of penalties.

4. The Tribunal found that the demand of Service Tax on 'Club or Association Service' was unsustainable based on the Gujarat High Court's decision. Regarding the other issues, since the Appellants had already paid the tax and considering the circumstances, the Tribunal decided to waive the penalties. The tax on 'Renting of Immovable Property Service' was imposed based on a retrospective amendment, which was struck down by the Delhi High Court. Hence, penalties were not imposed.

5. Consequently, the Tribunal set aside the demand of Service Tax on 'Club or Association Service' along with penalties, upheld the demand of tax on other services, and waived penalties. The appeal was disposed of accordingly, and the miscellaneous application for an extension of the stay order was dismissed as infructuous.