2016 (9) TMI 49 - HC - Service Tax

Business Auxiliary services / club or association services - Activities taken by the Federation for the promotion of agriculture - Held that - federation not falling in definition of Section 65 of the Finance Act, merely on the basis of collecting the subscription amount. - The issue whether the activities of the respondent-federation would be considered as an activity for promotions of agriculture and therefore, would fall in disclaimer clause, was not addressed to by Ld. advocate. Therefore, this Court would not proceed to examine the facts in a Tax Appeal more particularly considering the smallness of the amount involved in the present appeal no error found in decision of CESTAT appeal dismissed decided against the revenue.

Summary

Issues:
Appeal against order passed by CESTAT regarding service tax demand, interest, and penalties under the Finance Act, 1994.

Analysis:
The case involved an appeal under Section 35G of the Central Excise Act, 1944 against an order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) regarding a show cause notice issued to a State Federation of Co-Operative Sugar Factories Ltd. The notice demanded service tax, interest, and penalties under the Finance Act, 1994. The respondent contended that they were not covered under Section 65 of the Finance Act, 1994, as they were engaged in activities for the promotion of agriculture. However, the Joint Commissioner confirmed the service tax and imposed penalties. The respondent appealed to the Commissioner (Appeals-II) and then to CESTAT, which allowed the appeal. The appellant challenged this decision, arguing that CESTAT erred in interpreting Section 65 of the Finance Act, particularly in light of amendments introduced in 2011. The appellant claimed that the respondent-federation's activities, including collecting subscription from members, fell within the definition of taxable services under Section 65. The appellant also cited a judgment regarding a similar case involving a Sports Club, where the court declared certain provisions of the Finance Act as ultra vires. However, CESTAT considered an unreported judgment in another case and concluded that collecting subscriptions alone did not bring the respondent-federation under Section 65 of the Finance Act.

The court noted that the issue of the respondent-federation not falling under Section 65 solely based on collecting subscriptions was settled in previous judgments. The court did not address whether the activities of the respondent-federation were for the promotion of agriculture, as it was not raised during the submissions. Since no other points were argued, and no errors were found in the CESTAT judgment, the court rejected the appeal. The court emphasized that the settled legal position indicated by CESTAT led to the rejection of the appeal, especially considering the small amount involved.