2019 (8) TMI 1571 - AT - Service Tax

Taxability - Club and Association services - receipt from the members under Minimum Billing for non-provision of service - extended period of limitation - HELD THAT - In the present case the department has sought to tax an amount received by the Appellant club for non-provision of services in a particular period by the members of the club. However from the definition of the taxable service of club and association it is clear that there has to be services provided for subscription or any other amount whereas in the current case the amount is received for non-provision of any services by the club to its members. Hence it is our considered view that the same cannot be made taxable for the period prior to 1-7-2012. Further as regards the period w.e.f. 1-7-2012 since the introduction of definition of service as well as declared service under Section 66E of the Finance Act 1994 the Appellants have already paid the tax on the same we do not find any reason to interfere on the taxability for the said period and the amount being already paid by the Appellant on this score. Extended period of limitation - HELD THAT - The impugned SCN dated 22-4-2013 relates to the period 2007 to 2012 by invoking extended period of limitation whereas the Appellant has contended that on the similar issue for period prior to 2007 the department has already dropped the audit query on minimum billing taxability and hence the demand is also time-barred for there is no change in the law relating to club and association services during the interim period and the department cannot change its stand on the same issue already decided - Appellant had all the reasons to believe that such amounts would not be taxable under the service tax regime and hence the demand is also hit by limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Taxability of amounts received by the Appellant from its members as minimum billing for non-provision of service.

Analysis:
The Appellant, engaged in providing club services, was served with an audit memo regarding the taxability of receipts from members under 'Minimum Billing'. The Ld. Adjudicating Authority confirmed the tax demand, which was upheld by the Commissioner (Appeals), leading to the present appeal. The Ld. CA argued that prior to 1-7-2012, the term 'service' was not defined, and minimum billing charges did not constitute a taxable service. He relied on a Tribunal decision and contended that any sum received for non-provision of service cannot be taxed in the absence of a taxable service. The Ld. DR supported the original order.

The Tribunal analyzed the issue of taxability in detail. It noted that the definition of club and association services requires services to be provided for a subscription or any other amount. The department sought to tax the amount received for non-provision of services by the club members, which did not align with the definition of taxable service. The Tribunal held that such amounts could not be taxed for the period before 1-7-2012. For the period after 1-7-2012, when the Appellants had already paid tax based on the updated definition of service, the Tribunal found no reason to interfere with the taxability. Regarding the limitation period, the Tribunal observed that the demand for the period 2007 to 2012 was time-barred, as the department had previously dropped the audit query on minimum billing taxability for the period before 2007. The Tribunal concluded that the Appellant had valid reasons to believe such amounts were not taxable under the service tax regime, and thus, the demand was hit by limitation.

In conclusion, the Tribunal set aside the impugned orders, allowing the appeal filed by the Appellant with any consequential benefits.