2017 (8) TMI 1004 - AT - Service Tax

Classification of services - contribution made by members which are sugar Mills - taxability - Held that - the issue is no longer res-integra and the same is squarely covered by the decision of a Coordinate Bench ruling of this Tribunal in the case of Punjab State Federation of Cooperative Sugar Mills Ltd. Vs Commissioner of Central Excise, Chandigarh 2014 (8) TMI 56 - CESTAT NEW DELHI , where it was held that no service tax would be chargeable on the amount being received by the appellant from its Member Sugar Mills - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability to pay service tax on contributions made by members.
2. Nature of services provided by the appellant to cooperative sugar factories.
3. Applicability of service tax on subscriptions collected from sugar mills.
4. Precedent rulings and their impact on the current case.

Analysis:
1. The appeal was filed against an Order-in-Original holding the appellant liable to pay service tax on contributions made by its members, i.e., sugar mills. The appellant was directed to pay service tax along with penalties for a specific period.

2. The show cause notice alleged that the appellant was providing services to cooperative sugar factories and receiving payments in return. The services were identified as 'Business Auxiliary Service' under Section 65(19) of the Act, making them taxable. The appellant was accused of collecting subscriptions from sugar mills for services provided, leading to the demand for service tax payment and penalties.

3. The appellant argued that the issue was settled by a previous ruling of a Coordinate Bench in a similar case involving a Federation of Cooperative Sugar Mills. The Tribunal, relying on various court judgments, concluded that the appellant's activities fell under the category of club or association services, exempting them from service tax. The Tribunal found the issue to be squarely covered by the precedent ruling and set aside the impugned order.

4. In light of the precedent ruling and the arguments presented, the Tribunal allowed the appeal, overturning the previous order. The appellant was granted consequential benefits as per the law.

This judgment highlights the importance of precedent rulings in determining liability for service tax and the interpretation of services provided by entities to their members. The detailed analysis of the nature of services and the applicability of tax laws showcases the complexity involved in resolving such disputes within the legal framework.