2017 (10) TMI 1357 - HC - Service Tax

Commercial concern - appellant is a society formed for the re-settlement of ex-servicemen - demand of service tax - Held that - Identical issue decided in the case of PUNJAB EX-SERVICEMEN CORPORATION VERSUS UNION OF INDIA 2010 (9) TMI 871 - PUNJAB & HARYANA HIGH COURT , where it was held that As per definition of security agency under Section 65(94) service provider should be engaged in the business rendering specified service. There is no warrant for reading therein requirement of profit motive. In view of reasoning adopted by the Tribunal and the penalty which has been waived and considering that the society is consisted of exservicemen, it can be firmly concluded that no substantial question of law arises. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Appeal against partial exemption granted by Tribunal.
2. Appellant's status as a society for ex-servicemen.
3. Substantial questions of law raised by the appellant.
4. Substantial questions of law raised by the department.
5. Interpretation of profit motive in the context of service tax.
6. Applicability of 2004 amendment to the case.
7. Tribunal's decision on waiving penalty and substantial questions of law.

Analysis:

1. The appeals were filed against a common judgment where the Tribunal partly allowed the appellant's appeal, resulting in the appellant not being granted total exemption. The appellant, a society for re-settlement of ex-servicemen, argued that it is a not-for-profit entity aimed at settling ex-servicemen, not engaged in commercial activities. The service tax was levied on the appellant for a specific period, and the appeal was partly allowed.

2. The appellant's counsel framed substantial questions of law regarding the constitutionality of the Tribunal's order, the application of service tax on a non-commercial concern, retrospective imposition of liabilities, and the nature of a charitable organization accruing profits. The department's counsel raised questions on waiving penalties and the appellant's failure to provide necessary documents and reflect full receipts in returns.

3. The interpretation of profit motive in the context of service tax was discussed, emphasizing that the absence of profit motive does not exempt a service provider from tax liability. The definition of a security agency was analyzed, clarifying that the term "business" does not necessarily imply a profit motive, and the requirement of profit motive depends on legislative intent.

4. The applicability of a 2004 amendment was debated, with the conclusion that limitation laws at the time of decision apply, but the cause of action remains unaffected. Citing legal precedents, it was established that statutes of limitation are retrospective in enforcing causes of action accrued earlier but do not extinguish subsisting rights of action.

5. Ultimately, the Court dismissed both appeals, noting that no substantial question of law arose considering the Tribunal's reasoning, the waived penalty, and the appellant being an organization of ex-servicemen. The judgment highlighted the unique circumstances of the case and the societal purpose served by the appellant, leading to the dismissal of the appeals.