2016 (8) TMI 146 - AT - Service Tax

Waive of pre-deposit - Club and Association services - applicant has provided services to Haryana Tourism Corporation and receiving the supervision charges from 2% to 3% on the contract value - Further, it was revealed that the applicant is an Apex Co-operative Society registered under the Society Act, they have been formed for the welfare, safeguard and to promote the interest of individual labour in the state of Haryana and 19 societies are members of the applicant, its members had contributed some fixed amount at the rate fixed by the Registrar Co-operative Societies, Haryana. Held that - Prima-facie we view that the activity undertaken by the applicant are having certain objects and for attain those objects, the applicant is receiving certain contribution charges or supervisions charges. Although they are fixed by Haryana Tourism Corporation but prima-facie the activity is in nature of the allegation alleged. We also take note of that prior to 01.05.2011, the taxable service means any service provided by the Club and association in relation to provision of service facility or subscription or any other amount. The said definition have been changed w.e.f. 01.05.2011 therefore, prime facie, we are also of the view that for the period prior to 01.05.2011 for the demand of service tax, the applicant is having a strong case. - stay granted partly.

Summary

Issues: Service tax demand under Club and Association Services and Business Auxiliary Services for the period 2007-08 to 2011-12.

Analysis:
1. Background and Allegations: The service tax demand of ?2,28,97,417 was confirmed against the applicant for the period 2007-08 to 2011-12 under the category of Club and Association Services. The audit revealed that the applicant, an Apex Co-operative Society, provided services to Haryana Tourism Corporation and received supervision charges. The applicant was alleged to fall under the category of Business Auxiliary Service due to receiving tenders on behalf of member societies.

2. Contentions of the Applicant: The applicant argued that the show cause notice was issued invoking an extended period of limitation, which they believed was not applicable as they were under a bona fide belief that their activities were not liable to service tax. They highlighted that the definition of Club and Association Service was amended on 01.05.2011, making them not liable to pay service tax before this date. The applicant contended that their activities for statutory bodies like Haryana Tourism Corporation were not taxable services.

3. Arguments of the Respondent: The respondent supported the impugned order, asserting that the applicant's activities fell under Club and Association Services and Business Auxiliary Services.

4. Tribunal's Decision: After hearing both parties, the Tribunal observed that the applicant's activities involved receiving contribution and supervision charges for specific objectives. They noted that the definition of taxable services by Clubs and Associations changed from 01.05.2011. The Tribunal found that the applicant had a strong case for the period before this date. As a result, the Tribunal directed the applicant to make a pre-deposit of ?5 lakhs within eight weeks, with the balance amount of service tax, interest, and penalty waived off during the appeal's pendency.

5. Conclusion: The Tribunal's decision provided relief to the applicant by granting a waiver of the balance amount of service tax, interest, and penalty upon the pre-deposit of ?5 lakhs. The case highlighted the importance of understanding the evolving definitions of taxable services and the implications of statutory activities on service tax liability.