2017 (7) TMI 247 - AT - Service Tax

Management, maintenance or repair service - the appellant renders a service to the owners of the units for which amounts collected is the consideration - whether the appellant is provider of service or recipient of service? - Held that - there is no finding in the impugned order that the appellant renders management/maintenance or repair service. Even if the appellant has collected lump-sum amounts from the owners of the units the service of providing management/maintenance or repair service is procured by the appellant from organisations that possess the necessary proficiency. In these circumstances, the appellant is a recipient of the service provided by management, maintenance or repair service providers. It, therefore, does not appear to be logical for the appellant to be taxed as a provider of the service on collection from the owners and, hence, liability to tax under section 66 of Finance Act, 1994 is not sustainable. Health and fitness service - it is alleged, that the tax has not been paid despite these being consideration for providing health and fitness service - Held that - The appellant has been paying tax as provider of club or associates service ever since that was included as a taxable entry in section 65 (105) of Finance Act, 1994. No evidence has been placed on record by Revenue that the services so provided are not in the latter category but in the former. Accordingly, the service provided is not one of health and fitness service . Appeal allowed - decided in favor of appellant.

Summary

Issues:
Recovery of tax under Finance Act, 1994 for 'business auxiliary service', 'management, maintenance or repair service', and 'health and fitness service' for two separate periods.

Analysis:
1. Business Auxiliary Service: The appellant was held liable for tax under section 65 (105) (zzb) of the Finance Act, 1994 for promoting or marketing a client's service. However, the appellant argued that they were being reimbursed by group companies for shared expenses, and the tax should be on enumerated services only. The Tribunal found no evidence of the appellant acting as an intermediary between group companies and their customers, thus rejecting the tax liability.

2. Management, Maintenance, or Repair Service: The demand for this service was related to the operation of buildings until a registered society was formed. The appellant contended that they were developers collecting amounts from unit owners for common facilities, but they did not provide the actual service. The Tribunal agreed, stating that the appellant procured management services from proficient organizations and should not be taxed for merely collecting amounts.

3. Health and Fitness Service: The appellant charged fees for access to club facilities, which the Revenue claimed were for health and fitness services. However, the appellant argued they were providing club or associate services, for which they were already paying tax. The Tribunal found no evidence to support the Revenue's claim and ruled in favor of the appellant, stating the service provided was not 'health and fitness service'.

In conclusion, the Tribunal allowed the appeals of the assessee, emphasizing that tax liability under the Finance Act, 1994 must be based on the provision of specific services and not just the transfer of money. The judgment highlighted the importance of evidence in establishing tax liability and clarified the distinction between different taxable services under the Act.