2017 (1) TMI 167 - AT - Service Tax

Rectification of mistake - We have, after due deliberation in the order, held that M/s Gondwana Club is not liable to tax as provider of club or association service on the payments received from its members under various heads. Our order also makes it clear that the tax collected on receipts from catering contractors is to be treated as proper discharge of tax liability notwithstanding the payment having been made under the category of club or association service . We have also held that the entire amount paid by the contractors, attributed to any head of expense, is to be adopted as taxable value. The proper officer shall compute the tax liability and any consequential relief arising therefrom. Penalty amount under section 78 of the Finance Act, 1944 is upheld - penalty under section 76 is set aside. Application of ROM allowed.

Summary

Issues:
1. Refund of service tax under 'club or association service'
2. Setting aside penalty under section 76
3. Restricting demand under 'business support service'
4. Discrepancy in tax payment amounts
5. Clarity on consequential relief in the order

Refund of service tax under 'club or association service':
The appeal by M/s Gondwana Club involved a dispute regarding the refund of service tax amounting to ?24,36,697 paid during an investigation under the category of 'club or association service,' along with interest of ?8,81,396. The Tribunal found that the club was not liable to tax for services provided to its members, and the tax amount held as leviable was set aside. It was clarified that the tax collected from catering contractors was a proper discharge of tax liability, and the entire amount paid by the contractors was to be considered as taxable value.

Setting aside penalty under section 76:
The Tribunal upheld the penalty under section 78 of the Finance Act, 1944, to the extent of the confirmed tax amount. However, the penalty under section 76 was set aside. The penalties in the impugned order that were not upheld were naturally not sustained, providing clarity on the penalties imposed in the case.

Restricting demand under 'business support service':
The demand under the category of 'business support service' was restricted to the re-computed amount of ?2,46,004. The Tribunal clarified that the tax liability on receipts from catering contractors was properly discharged, irrespective of the payment being made under the 'club or association service' category.

Discrepancy in tax payment amounts:
An issue arose regarding a discrepancy in the tax payment amounts recorded in the order. The Tribunal noted the discrepancy in the taxable value for the discharge of tax in the category of 'support service for business or commerce' and rectified the error, ensuring the correct amounts were considered for tax liability.

Clarity on consequential relief in the order:
The Tribunal addressed the applicant's concerns regarding the clarity of the order's paragraph 13, ensuring that the consequential relief entitled to the appellant was clearly outlined. The Tribunal allowed the application for rectification of mistake, providing the necessary clarity and relief to the parties involved.