2008 (11) TMI 126 - AT - Service Tax

Demand of service tax treating the various training programmes conducted by them as commercial training or coaching service set aside - demand on the membership fees and other amounts collected from the members treating the same as club or association service set aside being society charitable / non commercial in nature- service tax on various seminars and meetings under convention service not justified as tax is leviable only if it is rendered by a commercial concern prior to 1-5-2006

Summary

Issues Involved:
1. Commercial Training and Coaching Services
2. Services of a Club or Association
3. Convention Services

Detailed Analysis:

Commercial Training and Coaching Services:

The primary issue was whether the Ahmedabad Management Association (AMA) could be classified as a "commercial concern" under the definition of "commercial training or coaching centre" as per section 65(27) of the Act. The Commissioner argued that the term "any institute or establishment" was broad enough to include AMA, and since AMA charged fees for its training programs and reported income in excess of expenditure, it was providing services on a commercial basis. However, AMA contended that it was a non-profit organization, and any surplus income was reinvested to achieve its objectives, without being distributed among members. The Tribunal referred to previous cases (Great Lakes Institute of Management Ltd. v. CST and Institute of Chartered Financial Analysis of India v. CC&CE) where similar organizations were not considered commercial concerns due to their non-profit nature and the reinvestment of surplus income. The Tribunal concluded that AMA was not a commercial concern, and its training programs did not qualify as commercial training or coaching services.

Services of a Club or Association:

AMA was also assessed for service tax on membership fees under the category of "club or association service." The Commissioner held that AMA provided services to its members, which were taxable. However, AMA argued that it did not provide specific services to members in return for the fees, unlike typical clubs that offer recreational facilities. The Tribunal noted that the revenue did not establish any specific services provided to members in return for the fees. Additionally, AMA claimed exclusion under the clause for activities of a charitable nature. The Commissioner defined "charitable" narrowly, but the Tribunal found that the revenue failed to demonstrate a quid pro quo relationship between AMA and its members. Consequently, the Tribunal held that AMA was not liable for service tax on membership fees.

Convention Services:

The third issue was the service tax on convention services provided by AMA. The Commissioner argued that AMA's conventions were not open to the general public and were conducted for a consideration, making them taxable. However, AMA contended that it was not a commercial concern and that its conventions were open to both members and the public. The Tribunal referred to a circular (F. No. B 11/1/2001-TRU) which clarified that conventions held by non-commercial concerns were not liable to service tax. Since AMA was not a commercial concern, the Tribunal held that it was not liable for service tax on convention services for the period prior to 1-5-2006.

Conclusion:

The Tribunal concluded that AMA was not a commercial concern and therefore, not liable for service tax under the categories of commercial training or coaching services, club or association services, and convention services. The appeal filed by AMA was allowed with consequential relief.