2008 (6) TMI 97 - AT - Service Tax

Club and association service - admitted fact is that the club started functioning with effect from 4th September 2006. As the service has been provided with effect from 4th September 2006 and service of club is liable to Service tax with effect from 16-6-2005, therefore, prima facie, it is not a fit case for total waiver of amount of Service tax

Summary

Issues: Application for waiver of pre-deposit of service tax and penalties based on the timing of service provision and receipt of amounts.

Analysis:
1. The applicant sought waiver of pre-deposit of Service tax and penalties amounting to Rs. 70,47,618, as the demand was confirmed due to providing club and association services. The applicant argued that since the amount was received before 16-6-2005 and the service tax provisions for club services were effective from that date, the demand was not sustainable. Citing a Supreme Court decision, the applicant contended that statutes are prima facie prospective unless expressly made retrospective, thus the demand should not apply.

2. The Revenue countered that although amounts were received before 16-6-2005, the club services were provided starting from 4th September 2006 when the club commenced operations. Therefore, the Revenue asserted that as services were rendered after 4th September 2006, the applicant was liable to pay Service tax as per the existing provisions on that date. The Revenue clarified that they were not claiming the tax demanded to be retrospective in nature.

3. The Tribunal noted that the club began operations on 4th September 2006 and since the service of club was subject to Service tax from 16-6-2005, the case did not warrant a total waiver of the Service tax amount. The Tribunal directed the applicant to deposit Rs. 15 lakhs within eight weeks, in addition to the amount already paid. Upon compliance with this directive, the pre-deposit of the remaining Service tax and penalties would be waived. The case was adjourned for compliance reporting on 13-8-2008.