2018 (2) TMI 233 - AT - Service Tax

Business Auxiliary Service - failure to discharge service tax - charitable concern - Held that - it is seen prior to 1.5.2006, the services rendered to a client by a commercial concern would only qualify as BAS. The services rendered to any person did not fall within the ambit of Business Auxiliary Service . It is brought out from the records that appellant company is a registered under Section 25 of the Companies Act as a non-profit organization and therefore cannot be considered as commercial concern. The Tribunal in the case of Raja Charity Trust 2017 (2) TMI 387 - CESTAT CHENNAI had an occasion to analyze a similar issue and has taken the view that in cases where the assessee is not a commercial concern would not be covered by definition of Business Auxiliary Service during the relevant period. Demand not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Alleged failure to discharge service tax liability for 'Business Auxiliary Service'.

Analysis:
The appellants received a show cause notice for not paying service tax amounting to ?2,33,16,506 for providing 'Business Auxiliary Service'. The original authority upheld the demand, interest, and imposed a penalty. The appellant challenged this before the Tribunal.

On behalf of the appellant, it was argued that the company is a non-profit organization registered under Section 25 of the Companies Act, 1956. The company's main objective is to channel funds for village development and Self Help Groups, not for commercial purposes. The definition of 'Business Auxiliary Service' during the relevant period referred to a 'commercial concern'. As the appellant was not a profit-oriented entity, they did not fall under this definition. A precedent case was cited to support this argument.

The Revenue, represented by the Ld. A.R, contended that the appellant is a commercial concern and thus liable for the service tax. A different case was cited to support this position.

Upon hearing both sides, the Tribunal examined the definition of 'Business Auxiliary Service' during the relevant period. It was noted that prior to 1.5.2006, only services provided by a commercial concern qualified as 'Business Auxiliary Service'. As the appellant was a non-profit organization, they did not fall under this category. The case cited by the Revenue was deemed inapplicable as it involved a different type of entity. Relying on a previous decision and the specific wording of the law, the Tribunal concluded that the demand was unjustified. The impugned order was set aside, and the appeal was allowed with any necessary relief as per the law. Additionally, a motion filed by the department for a change of cause title was granted.